French construction equipment maker Altrad Investment Authority has agreed to acquire UK oil services company Cape for around GBP332.2 million (US$429 2 million) in a deal that has been unanimously recommended by Cape’s board, it said on July 7.
The cash offer of 265 pence (US$3.42) per share represented a 46% premium on Cape’s closing price on July 6.
The news lifted shares in Middlesex-based Cape by as much as 47.8% to their highest point since May 2015. Slowing activity in areas like the North Sea has dented Cape’s profit margins in recent years as energy companies put pressure on oil service companies to cut their prices.
The deal will “deliver attractive near and longer-term benefit for Cape and Altrad,” said the French company’s chairman, Mohed Altrad, adding that the two companies complement each other in terms of geographic and product mix.
Combining them will create a “multidisciplinary industrial services leader in key markets around the world, with a strong competitive edge,” allowing them to better meet their respective customers’ requirements, he said.
Cape chairman Tim Eggar said that the offer “represents fair and reasonable value in cash today for Cape shareholders”.
“Under the leadership of its current management team, Cape has made significant strategic, operational and financial progress and, despite a more challenging year anticipated in 2018, the Cape board has confidence in Cape’s future prospects,” he added.
Cape’s directors have unanimously recommended that shareholders accept the offer and say they will sell their own holdings in Cape, amounting to around 0.24% of the firm.
Key investor Artemis Investment Management, which owned 6.8% of Cape, has also agreed to sell its stake, while Schroder Investment Management and Henderson Global Investors, which together owned around 11.2% of Cape, have also issued letters of intent (LoIs) to accept the offer.
This is the latest of a string of deals involving oil services companies as the sector continues a move towards consolidation. Wood Group, for example, made a GBP2.2 billion (US$2.84 billion) pounce earlier this year on Amec Foster Wheeler.
Altrad says it will fund the deal through a loan from BNP Paribas.