Ensign turns up the pressure in its hostile bid for Trinidad Drilling
Ensign Energy Services Inc. (ESI.TO) may have taken the upper hand in the battle to acquire Trinidad Drilling Ltd. (TDG.TO) after giving shareholders a tighter deadline to accept its cash offer or settle for a lower all-stock bid from Precision Drilling Corp.
The Canadian oilfield-services provider on Friday accelerated the expiration of its cash bid by more than two weeks to Nov. 27, giving rival Precision Drilling’s shares little time to recover from the current market doldrums. Ensign’s offer values Trinidad at $1.68 a share, while Precision Drilling’s bid is about $1.50 a share, based on Monday’s stock price. Including debt, Ensign says its offer represents an enterprise value of about $947 million for Trinidad.
“Ensign appears to be in pole position to be successful in its hostile bid for Trinidad Drilling, and this move has notably shortened the time period under which Precision’s shares have to appreciate to create a competitive bid,” GMP FirstEnergy analyst Ian Gillies said in a note. Gillies also noted that the expiration of Ensign’s bid comes before Trinidad and Precision’s shareholder meetings, and that Ensign only needs a bare majority of Trinidad shares to vote in its favor.
Trinidad responded that it continues to support Precision Drilling’s bid because it gives shareholders the chance to benefit from the merger over the long term. Precision said it remains committed to acquiring Trinidad.
Trinidad shares rose 2.2 per cent to $1.65 at 11:47 a.m. in Toronto. Precision Drilling climbed 4.6 per cent to $3.41, and Ensign gained 4 per cent to $5.52. All three companies are based in Calgary.