Total wins takeover battle for Savanna
Total Energy Services Inc. has beat out a rival in its acrimonious and drawn-out $444-million hostile takeover bid for heavily indebted driller Savanna Energy Services Corp.
“It’s been a long process, we’re obviously pleased,” Total president and CEO Daniel Halyk said Monday after more than 51 per cent of Savanna shareholders accepted his company’s shares-plus-cash takeover offer in the face of a competing, negotiated deal between Savanna and competitor Western Energy Services Corp.
The $444 million value of Total’s deal is based on Monday’s share price, and includes debt.
Western issued a news release Monday saying its directors were “understandably disappointed with the outcome of the bid.” The company did not respond to a request for comment.
Halyk said the combination of Total and Savanna would create the second-largest contract drilling company in Canada — Precision Drilling Corp. is the largest — and would also turn Total into a larger, better-diversified oilfield services player. “We are in a tough industry right now, it’s uncertain,” Halyk said, referring to the prolonged downturn in oil prices and the resulting slowdown in oilfield activity. Investors and oilfield workers want “a financially stable, strong company,” Halyk said.
AltaCorp Capital analyst Aaron MacNeil said in a research note that “Total’s acquisition of Savanna has clearly been a contentious process,” and added, “there is potential for continued animosity, however, we hope that both sides can put their differences aside and work together in the best interests of shareholders.”
After Total announced its hostile bid for Savanna in November, the target company attracted a competing bid from Western and had tried to convince shareholders to ignore Total’s bid over the past several months and as recently as Thursday. Still, Halyk said he expected a friendlier and more cooperative relationship now that his firm had become Savanna’s majority shareholder.
Despite being Savanna’s largest shareholder, Total still has work to do to fully close the deal. It extended the time limit for remaining Savanna shareholders to tender their shares and Halyk said he plans to meet with Savanna’s lenders.