Dril-Quip, Inc. (NYSE: DRQ) has received a favorable recommendation from leading independent proxy advisory firm Institutional Shareholder Services (ISS) for its proposed merger with Innovex Downhole Solutions, Inc. (Innovex). ISS has recommended that Dril-Quip stockholders vote "for" the merger, citing the compelling financial benefits expected from the transaction, including nearly $30 million in annual cost savings and additional revenue synergies.
The merger with Innovex is expected to result in a combined company with increased global scale and an expanded offshore and onshore product suite. ISS also highlighted the opportunity for expansion in key markets through cross-selling and accelerated penetration, specifically in Canada, the continental U.S., Saudi Arabia, and global offshore. Additionally, the combined company will maintain a net cash position of approximately $100 million post-close, which can be utilized for future investment and acquisitions.
Dril-Quip's Chairman of the Board, John V. Lovoi, emphasized that the merger with Innovex creates a unique energy industrial platform with significantly larger scale, a diversified global presence, a curated portfolio of complementary and mission-critical products, and a strong balance sheet. The transaction is expected to be immediately and significantly accretive on all metrics, including earnings per share and free cash flow per share, while unlocking significant synergies and market expansion opportunities across products and geographies.
The Dril-Quip board unanimously recommends that stockholders vote "for" the merger with Innovex and each of the associated proposals at the special meeting on September 5th, 2024. The company emphasized the importance of these proposals, stating that they were an integral component of the negotiation between Dril-Quip and Innovex, benefiting Dril-Quip shareholders. The closing of the transaction, which ISS supports, requires the approval of Proposal 2, among others.
The special meeting is scheduled to be held on Thursday, September 5, 2024, at 9:30 a.m. Central Time, and the Dril-Quip board urges all stockholders to vote "for" all the proposals for consideration.
Dril-Quip is being advised by Citi as the lead financial advisor, with Gibson, Dunn & Crutcher LLP serving as the company's legal advisor. Innovex, on the other hand, is being advised by Goldman Sachs & Co. LLC as the lead financial advisor, with Akin Gump Strauss Hauer & Feld LLP serving as the company's legal advisor, assisted by Paul Hastings LLP.
As a result of these announcements, the company's shares have moved -0.1% on the market, and are now trading at a price of $15.23. For more information, read the company's full 8-K submission here.
