Sandvik Enters Upstream Service Industry With $740 Million Acquisition Of Texas Company

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To purchase the Carrollton, TX-based upstream service company.

Drilling supplier Varel International Energy Services Inc. said Jan. 7 that it would sell its 66-year-old company to a Swedish firm for $740 million.

The acquisition by Sandvik AB, headquartered in Stockholm, is the company’s first entryway into the upstream oil and gas industry. Sandvik is a global engineering group involved in tooling and materials technology with operations in more than 130 countries.

Privately held Varel, based in Carrollton, Texas, is a global supplier of drilling solutions focusing on drill bits, downhole products for well construction and completion to the oil and gas, mining and industrial markets. Revenues in 2013 were an estimated $340 million.

The company employs more than 1,300 people and has manufacturing facilities in Houston, Texas; Matamoros, Mexico; Aberdeen, Scotland; Kurgan, Russia and Tarbes, France. It conducts business in more than 60 countries through three operating divisions.

Sandvik selected Varel based on its long history of delivering technology, quality, customer service and superior growth and the close ties to Sandvik core capabilities and competences. Varel will form a new product area within the business area Sandvik Venture.

"This acquisition will provide a great platform to enable Sandvik to enter into drilling solutions in the oil and gas sector. The combination of Varel’s solid market position and strong customer offering, along with Sandvik’s broader drilling solutions capabilities and extensive knowledge in highly relevant materials will support Varel's continued growth," Tomas Nordahl, Sandvik Venture president, said in the release.

The acquisition, one of the largest for Sandvik, is expected to close within the first six months of 2014.