Oil drillers Savanna, Western Lakota to merge
Last Updated: Tuesday, June 20, 2006 | 4:47 PM ET
CBC News
Calgary-based Savanna Energy Services Corp. and Western Lakota Energy Services Inc. are merging to create the third biggest publicly traded oil drilling company in Canada.
Savanna is offering 0.64 shares of its stock for each share of Western Lakota. Based on Monday's closing price for Savanna stock, that values the takeover at $632.6 million.
Shares of both companies rose in Tuesday trading on the TSX. Savanna stock climbed 35 cents to $23.20, while Lakota stock jumped 72 cents to $14.70.
Approval by two-thirds of Western Lakota shareholders is required. The Western Lakota board is recommending shareholders accept the offer.
The merged company, to be known as Savanna Energy Services Corp., will have an enterprise value of $1.5 billion.
The new Savanna will operate deep and shallow drilling rigs in Canada and the U.S. Combining the two companies would save money and lead to more business, they said.
Western Lakota has formed partnerships with a number of First Nations groups across Western Canada.
"The aboriginal relationships will facilitate the introduction of industry dominant hybrid drilling and well servicing to a whole new group of customers and regions," the companies said in a joint release.
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