Frank’s International NV (NYSE:FI), through its Texas-based indirect wholly-owned subsidiary Frank's International LLC, has entered into a definitive purchase agreement for the purchase of Timco Services Inc., a privately-held provider of tubular running services and rental equipment onshore in the southern US and offshore in the Gulf of Mexico.
According to the 8-K filing, the deal is expected to have a purchase price of $75 million at close, with up to $20 million in an earnout dependent on market conditions.The earnout is payable in two separate payments of $10 million, each of which are contingent on the US land rotary rig count, as reported by Baker Hughes, exceeding certain targets over prescribed time periods during the period from the fourth quarter of 2015 through the second quarter of 2017.
In addition, Frank's LLC has agreed to make a tax reimbursement payment of $8 million to the sellers in connection with closing of the transaction as a reimbursement of estimated additional tax costs to be incurred by the sellers as a result of structuring the transaction in a manner that provides a step up in the tax basis of Timco's assets.
Gary Luquette, president and CEO of Frank’s International, stated "We are pleased to have entered into an agreement to acquire Timco as we believe this transaction is a unique opportunity to expand our presence in the US land market and demonstrate our commitment to our core business. Timco is a premium provider of tubing and casing services in several key geographic areas, including the Eagle Ford Shale, the Permian’s Delaware Basin, the Haynesville Shale and the US Gulf Coast, with an operating model that closely mirrors Frank’s International.”
Mark Guidry, president of Timco, will serve as vice president of Frank’s South Texas operations once the deal has closed.
Simmons & Company International acted as financial advisor to Frank’s International, and Vinson & Elkins LLP represented the company in connection with the transaction. Founders Investment Banking acted as Timco’s financial advisor, and Butler Snow LLP represented Timco in connection with the transaction.
The acquisition, expected to be financed with cash on hand, is scheduled to close in the second quarter of 2015, subject to regulatory approval and other customary closing conditions.