SERVICE SECTOR / Artisan Releases Details Of Merger With Ensign
Resource Service Group
ARTISAN CORPORATION
CALGARY, Alta., March 30 /CNW/ - Artisan Corporation and Ensign Resource
Service Group Inc. today released details of a proposal to merge the assets
and operations of both companies. The resulting company will have the second
largest drilling rig fleet and the third largest service rig fleet in Canada.
The combined company will have a total of 182 drilling rigs, in Canada and the
United States, and 115 service rigs in Canada after the completion of the
merger.
The merger will be realized through the exchange of cash and Ensign
common shares for Artisan common shares. Ensign will offer to acquire all of
the issued and outstanding Artisan common shares for $10.50 cash, or 0.3415
Ensign common shares for each Artisan common share, or a combination of cash
and Ensign common shares. The terms of the merger require the aggregate amount
of the cash payable to be $70 million and the aggregate number of Ensign
common shares to be issued to be approximately 2.759 million Ensign shares.
This price represents a 17.1% premium to the 20 day weighted average trading
price of the Artisan shares prior to the date of the announcement of the
merger. If all Artisan shares are tendered, the equity value of the merger
will be approximately $155 million.
The merged company will be extraordinarily well positioned to compete in
the oilfield services industry in Western Canada and will continue to have
operations in the United States. In addition to its drilling and well
servicing businesses, the merged company will also have operations in the coil
tubing, slickline wireline, production testing and well optimization
businesses, and in the manufacturing of oil and gas processing equipment. The
merged company will have an equity market capitalization of approximately $725
million, long term indebtedness of approximately $100 million and working
capital of approximately $50 million, after giving effect to the payment of
the cash amount under the merger. It is anticipated that the merger will
provide for increased liquidity for the shareholders of both companies.
The merger has the unanimous support of the Board of Directors of each of
Artisan and Ensign. The offer will be conditional on 66 2/3% of the Artisan
shares being tendered and the receipt of all necessary regulatory approvals.
Artisan has agreed to pay Ensign a non-completion fee of $6 million in certain
circumstances. Artisan has agreed not to solicit other proposals or offers.
The Board of Directors of Artisan is entitled to consider financially superior
proposals for Artisan and its shareholders. Artisan has agreed not to accept a
superior proposal if Ensign elects to amend the merger terms, within four
business days following notice to Ensign of the terms of such superior
proposal, to provide equal or higher value than that provided by the superior
proposal.
Certain directors of Artisan owning approximately 26% of the Artisan
shares have agreed to tender and not withdraw their shares under the merger,
unless a superior proposal is made, or in certain other circumstances where
the merger agreement is terminated.
Artisan President and Chief Executive Officer, Howard Dixon said ''This
is an excellent transaction for our shareholders and our employees. I believe
that these two companies have similar corporate cultures and share a common
commitment to quality and customer service. Our shareholders are receiving a
fair price and the opportunity to participate on an ongoing basis in a dynamic
company arising out of this merger. In addition, the opportunities for the
employees of Artisan from this merger are outstanding.''
The offer will be mailed as soon as possible but in any event before
April 17, 1998 and will be open for acceptance for a 21 day period.
Selby Porter, President of Ensign, commented ''We are delighted to
welcome the Artisan employees to the Ensign Group. The combined resources of
these companies, in terms of both people and assets, will enable us to further
enhance our service to customers. With this merger, we will be able to offer
some new products and services, and provide even more breadth in the
availability and choice of drilling and service rigs to customers.''
Peters & Co. Limited is acting as financial advisor to Artisan
Corporation in this transaction.
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