There are new developments in the pending $2 billion merger of Houston-based C&J Energy Services Inc. and Nabors Industries Ltd.
According to the Houston Business Journal, C&J Energy announced that the cash portion of its merger with Nabors’ production and completion businesses will drop from $938 million to $688 million and that the debt incurred to fund the cash consideration will also be proportionally reduced. Pending stockholder approval and closing conditions, the deal is expected to be completed in March.
Oddly enough, this isn’t the first time the valuation of the merger has gone down. In fact, this is the third time since the deal was announced last June that the valuation of the merger has dropped. When the deal was first brought to the table last June, the original value of the merger was set at $2.86 billion. The deal was then dropped from $2.86 billion to $2.1 billion and has now dropped once again by another $250 million.
Founder, chairman and CEO of C&J Energy Josh Comstock commented:
“By reducing C&J’s cash obligation by $250 million and therefore the required debt financing, our combined company will have more liquidity, lower leverage and a stronger balance sheet, which are critical, especially during a challenging time for our industry.”
The merger will allow Nabors to own 53 percent of the new C&J company as part of an inversion deal. C&J would become formally based in the Bahamas for tax purposes with its operational headquarters remaining in Houston.