Umbrellastream Sweetens Expro Bid

A Candover-led private equity consortium took the unusual step of bidding against itself yesterday by sweetening its 1.8bn pounds bid for Expro International in a “pre-emptive strike” to deter Halliburton from counter-bidding for the oil services group.

Yesterday’s higher bid from the Umbrellastream consortium, which includes Goldman Sachs and Alpinvest Partners, lifted its offer price for Expro from 15.50 to 16.15 pounds a share, valuing its equity at 1.81bn pounds.

Halliburton, which saw its initial 15.25 pounds counter-bid rapidly trumped by the private equity consortium last month, has until next Friday to decide whether to submit another offer for Expro.

A person close to the private equity consortium said: “This is a pre-emptive strike in a phoney war. If these guys [at Halliburton] want to buy the business they are going to have to pay close to 17 pounds per share for it.”

Expro shares rose 48p to 16.63 pounds.
Expro said it was still in discussions with Halliburton. The US oilfield services group said it was still considering its options.

Analysts judged that by sweetening its bid the private equity consortium may be trying to flush out a higher bid from Halliburton.
If successful, the Candover-led bid would be the biggest UK leveraged buy-out this year.

The fierce competition for Expro, which has 200m pounds of debt, reflects the booming market for oil services companies, as they are called on to squeeze more oil out of existing fields and to stem falls in ageing ones in the wake of oil price rises.

Expro held a shareholder meeting on June 9 to secure backing for the revised private equity offer, ahead of a planned court hearing three weeks later to approve the takeover.

However, Halliburton could still delay a formal offer until the second half of June.
The “drop dead” deadline for Halliburton to make a definite offer is June 20, ahead of planned court hearings to complete the Umbrellastream takeover on June 23.

Any new Halliburton bid would need to be a firm bid without the pre-conditions that accompanied its initial approach yesterday.

The person close to the private equity consortium said the extra regulatory hurdles that Halliburton would face in its bid meant shareholders would have to wait longer to receive cash if they accepted the US group’s offer. “This is the final nail in the coffin of the phoney bid war,” said the person.

There has been a flurry of private equity activity in the sector, including First Reserve’s 906m pounds buy-out of Abbot Group, the oil drilling rig operator, last year.
This reflects the fact that, after a 10-fold rise in oil prices in the past decade, oil companies have increased capital expenditure by more than 10 per cent a year.