Calgary-based Trican Well Service and Canyon Technical Services merging

Trican

Photo: Trican Well Service.

Combined company will be one of largest public Canadian oilfield services providers

Trican Well Service Ltd. and Canyon Services Group Inc. announced in late March they have entered into an arrangement agreement where Trican has agreed to acquire all of the issued and outstanding common shares of Canyon on the basis of 1.70 common shares of Trican  for each outstanding Canyon share, according to a press release.

The consideration to be received by Canyon shareholders reflects a value of $6.63 per Canyon share based on the closing price of Trican shares on the TSX on March 21, 2017, which represents a 32 per cent premium over the closing price of Canyon shares on the TSX on March 21, 2017.

“This combination with Canyon will create a Western Canadian based leading energy services firm that has the asset base, efficient cost structure and financial capacity to create value for all of our combined stakeholders,” said Dale Dusterhoft, Trican’s CEO.

“We have always held Canyon in very high regard and look forward to welcoming the Canyon employees to the Trican family. Our companies have a shared base of values and an alignment on our commitment to safety, service, technology and operational excellence.”

The value is approximately $637 million, including $40 million in Canyon debt.  Existing holders of Trican Shares and Canyon Shares will collectively own 56 per cent and 44 per cent of the combined company.

“The transaction provides our shareholders an opportunity to participate in the exceptional value potential of the combined company. Trican and Canyon have similar businesses and shared values and we are committed to driving a successful integration,” said Brad Fedora, Canyon CEO.

“We envision a combined company that will set the standard for service quality, field execution and operating efficiencies. We will deliver exceptional service and technology to our existing and prospective clients and will create new career opportunities for our employees.”

Transaction Rationale

  • Premier assets in Canadian pressure pumping and related services
    • Combined company with 675,000 HHP of available fracturing capacity, a leading footprint of service bases across Western Canada and a complementary suite of products and services across cementing, coiled tubing, nitrogen, industrial services and fluid management.
  • Complementary cultures and strategic vision
    • Trican and Canyon have very similar cultures and values and a shared vision of the industry opportunity going forward. We are committed to having the best people in the industry providing safe, high quality, efficient service with fit for purpose technology and the best maintained equipment.
  • Platform for continued growth and enhanced ability to service broader and more complex customer requirements
    • We believe the combined company will have the operating assets, technical leadership and scale to meet increasingly complex client demands and through the expanded base of service lines the company will have increased optionality to target future growth. As supportive economic conditions emerge, the combined company will look to bring a significant volume of currently parked equipment back to work at a low cost.
  • Significant opportunities for cost synergies
    • The combined company is expected to begin realizing significant synergies immediately. Trican expects to achieve approximately $20 million in annual pre-tax synergies upon the expected completion of the integration in 2018 by creating additional leverage on the combined company’s fixed cost structure, reducing corporate overhead and optimizing operational facilities.
  • Strong balance sheet, access to capital and attractive capital markets positioning
    • The combined company will have a well-positioned balance sheet and the free cash flow profile to fund growth. With a market capitalization of approximately $1.4 billion at the time of announcement of the Transaction, the combined company will be one of the largest public Canadian oilfield services providers by market capitalization, will be well positioned for index inclusion and will have enhanced public market liquidity.

 

 

Posted in: Canada

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