HAMILTON, Bermuda - Nabors Industries Ltd. (NYSE: NYSE:NBR), a global provider of advanced technology for the energy industry, has entered into a definitive agreement to acquire Parker Wellbore. The transaction, which involves Nabors acquiring all issued and outstanding common shares of Parker, will be executed in exchange for 4.8 million shares of Nabors common stock, with a share price collar arrangement in place.
Parker Wellbore, known for its drilling services and high-performance downhole tubular rentals, aligns with Nabors' strategic expansion of its high margin, capex-light Nabors Drilling Solutions business. Parker's footprint across the U.S., Middle East, Latin America, and Asia complements Nabors' existing operations and is expected to enhance the company's global business presence.
Anthony Petrello, Chairman, President & CEO of Nabors, emphasized the strategic benefits of the acquisition, stating it is expected to deliver profitable growth and improved leverage metrics for Nabors due to Parker's resilient free cash flow and healthy capital structure. Petrello also expressed confidence in extending Parker's success through Nabors' global technology platform.
Sandy Esslemont, President and CEO of Parker, expressed a positive outlook on the acquisition, highlighting the alignment of Parker's leading position with Nabors' footprint and the anticipated benefits for customers, investors, and the industry.
The acquisition is projected to be immediately accretive to Nabors' free cash flow and valuation metrics. It is also expected to bolster Nabors' scale and improve leverage metrics, with the combined company's adjusted EBITDA for the first six months of 2024 reported at $527 million. Parker anticipates generating $180 million in EBITDA for the full year 2024.
Nabors foresees up to $35 million of annualized expense synergies, primarily from reductions in overhead and operational expenses, with the majority realized within the first 12 months post-closing. The transaction, which includes the assumption of approximately $100 million in net debt, has been approved by both Nabors' and Parker's Boards of Directors and is expected to close in early 2025, pending customary closing conditions, shareholder, and regulatory approvals.
A conference call to discuss the transaction was held today, with a slide presentation made available on Nabors' investor relations website. This article is based on a press release statement.
In other recent news, Nabors Industries Ltd has seen significant adjustments to its financial projections and ratings by analyst firms JPMorgan and Citi. JPMorgan has lowered its price target for Nabors from $94.00 to $75.00, maintaining an Underweight rating. The firm's revised EBITDA estimates for Nabors for 2024 and 2025 are $882 million and $935 million, respectively, with the free cash flow forecasts for the same years adjusted to $137 million and $118 million.
Citi also downgraded Nabors' stock from Buy to Neutral, adjusting its price target to $75. The firm's revised forecasts for Nabors indicate a 2025 EBITDA of $934 million, a 5% decrease from the consensus, and a significant reduction in the company's 2025 free cash flow to $90 million, over 50% below the consensus.
In terms of operations, Nabors reported robust revenue growth in its international operations and other segments, despite a 6% decline in the US Lower 48 rig count. The company's revenue from operations stood at $735 million. Additionally, Nabors has made strides in sustainability and debt reduction, decreasing its net debt by almost $50 million to $2.04 billion.
These are recent developments for Nabors Industries, which continues to focus on advanced technology solutions and international market growth, planning to deploy five additional rigs internationally throughout 2024.
InvestingPro Insights
As Nabors Industries Ltd. (NYSE: NBR) moves forward with its acquisition of Parker Wellbore, investors should consider some key financial metrics and insights from InvestingPro.
According to InvestingPro data, Nabors has a market capitalization of $740.21 million and generated revenue of $2.93 billion in the last twelve months as of Q2 2024. The company's gross profit margin stands at a healthy 40.24%, indicating strong operational efficiency.
An InvestingPro Tip highlights that Nabors' stock has shown a strong return over the last month, with price data confirming a 23.81% total return in the past month. This recent performance could reflect positive market sentiment towards the company's strategic moves, including the Parker Wellbore acquisition.
However, it's important to note that Nabors faces some challenges. Another InvestingPro Tip indicates that analysts do not anticipate the company will be profitable this year. This aligns with the reported negative EPS figures and the company's current focus on strategic growth rather than immediate profitability.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for Nabors Industries, providing a deeper understanding of the company's financial health and market position.
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