Combined, DNOW and MRC Global will have more than 350 service and distribution locations spanning 20 countries. DNOW will continue to be headquartered in Houston after closing.(Source: Shutterstock.com)
DNOW will acquire MRC Global for $1.5 billion in stock, combining two public energy service and infrastructure players.
The combined company will have an expanded geographic footprint and distribution presence in the U.S., Canada and international markets. DNOW said the pro forma company would generate $70 million in annual cost synergies within three years.
Under terms of the deal announced June 26, MRC Global shareholders will receive 0.9489 shares of DNOW common stock for each share of MRC Global common stock. The terms represent an 8% premium over MRC Global’s 30-day volume weighted average trading price of $12.77 per share.
DNOW shareholders will own approximately 56.5% of the combined company; MRC Global shareholders the other 43.5%.
The merger of the two Houston-based companies will result in a combined enterprise value of $3 billion. Both the DNOW and MRC Global boards have signed off on the transaction.
“The combination of DNOW and MRC Global will create a premier energy and industrial solutions provider with a balanced portfolio of businesses and a diversified customer base fortifying long-term profitability and cash flow generation,” said DNOW President and CEO David Cherechinsky.
DNOW is a global supplier of energy and industrial products, as well as engineered and packaged process and production equipment. The company has a headcount of around 2,600 employees worldwide.
MRC Global is a distributor of pipe, valves, fittings and other infrastructure products to the industrial and energy sectors.
Combined, DNOW and MRC Global will have more than 350 service and distribution locations across over 20 countries and a workforce of 5,000.
The company will be called DNOW after closing and trade on the New York Stock Exchange under the ticker symbol “DNOW.” The combined firm will continue to be headquartered in Houston.
Cherechinsky will serve as president and CEO of the combined company after closing. DNOW CFO Mark Johnson will act as CFO of the combined firm.
DNOW’s board of directors will also expand from eight to 10 directors, including two of MRC Global’s current independent directors. Dick Alario will continue to serve as board chairman.
The deal is expected to close in the fourth quarter.
Goldman Sachs & Co. LLC is acting as exclusive financial adviser to DNOW and has provided committed financing for the deal. Kirkland & Ellis LLP is acting as legal adviser.
J.P. Morgan Securities LLC is acting as exclusive financial adviser to MRC Global. Akin Gump Strauss Hauer & Feld LLP is serving as legal adviser.
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