UK-based company Expro and Dutch rival Frank’s International have announced plans for a merger creating a billion-dollar oilfield services giant.
Expro shareholders will own approximately 65% of the combined business, with Frank’s investors owning approximately 35%.
The value of the all-share deal was undisclosed.
Announcing the merger, Expro and Frank’s said it would bring together two companies with “decades of market leadership, best-in-class safety and service quality performance, exceptional talent and global capabilities in well construction, well flow management, subsea well access, well intervention and production services”.
The combined company will have “a strong, debt-free balance sheet, robust order backlog, more than $1 billion (£716 million) of pro forma annual revenue as well as an ability to generate through-cycle free cash flow and growth”, the firms said.
As of the end of March 2019, Reading-headquartered Expro employed more than 4,300 people globally. Nearly 670 of these employees were based in Aberdeen.
Frank’s has its global headquarters in Den Helder, in the Netherlands, and overseas bases in locations including Aberdeen.
Annual cost savings of around $70m (£50m) are expected from the combination but Expro and Frank’s have said nothing about any potential impact on jobs.
Expro chief executive Mike Jardon said: “This transaction unites two established industry players to create a leading service provider with an extensive portfolio of capabilities across the well lifecycle.
“Together, Expro and Frank’s will be better positioned to support our customers around the world and navigate industry cyclicality.
“This business combination also allows us to rationalise facilities and other support costs, optimise business processes, capitalise on profitable growth opportunities and create value for shareholders of both companies, particularly as the environment for international projects continues to improve.”
The combination of Expro and Frank’s also allows us to advance our commitment to a lower carbon future.”
Mike Jardon, Expro CEO
Mr Jardon added: “We expect the combined company’s scale, debt-free balance sheet and cash flow outlook will allow us to accelerate growth.
“This will be achieved through an enhanced ability to deliver integrated customer solutions and increased investments in digitalisation, autonomous operations and other technologies.
“The combination of Expro and Frank’s also allows us to advance our commitment to a lower carbon future, which is underpinned by our goals to maximise efficiency and improve our products and services to help the company and its customers lower emissions.
“Finally, this transaction will unite two of the premier teams in the industry, and better allow us to attract, retain and develop the best workforce.
“We look forward to combining the strengths of our businesses and teams, and building upon both companies’ proud track records of providing safe, reliable and cost-effective solutions and best-in-class service quality to Expro’s and Frank’s many customers.”
We expect this combination to create career development and advancement opportunities.”
Mike Kearney, Frank’s president, chairman and CEO
Frank’s president, chairman and chief executive Mike Kearney said: “Expro and Frank’s share complementary cultures, values and competencies – all of which support a smooth integration for our customers and employees.
“After undertaking a thorough process to consider a range of strategic alternatives, we are confident that this transaction presents a compelling opportunity for Frank’s shareholders to benefit from value creation led by returns-focused growth.
“The combination brings scale, improved profitability and free cash flow and, together, we will be better positioned for the industry recovery, of which we are in the early stages.
“We are extremely proud of Frank’s history and the talented individuals of Frank’s who helped build and sustain our great company.
“We expect this combination to create career development and advancement opportunities for many of our employees as part of a more balanced and stronger combined organisation.”
At December 31, 2020, Expro’s order backlog was worth about $1bn (£716m).
The combined company will have operations in more than 50 countries and across six continents, including the world’s most prolific oil and gas regions.
Expro and Frank’s are targeting about $55m (£39m) of annual savings in the first 12 months, ramping up to $70m (£50m) within 36 months.
The combined company will have a debt-free balance sheet and pro forma revenue and adjusted earnings before interest, taxes, depreciation, and amortisation, excluding identified savings, of more than $1bn (£716m) and $107m (£77m), respectively, based on the 12 months ended December 31 2020.
Mr Jardon will become CEO of the combined company, with Mr Kearney serving as chairman.
The rest of the new firm’s nine-member board will comprise five additional directors appointed by Expro and two from Frank’s.
Expro and Frank’s combined business will be headquartered in Houston, in the US.