UNITED STATES: Halliburton Confirms It's in Talks to Buy Expro International

Halliburton Confirms It's in Talks to Buy Expro
Halliburton Co., the world's second-largest oilfield contractor, said it's in talks to buy Expro International

Halliburton would make an offer in cash, the Houston-based company said today in a statement. The company said it's ``currently conducting its due diligence on Expro.'' Expro shares rose as much as 6.9 percent.

A takeover of Expro, which makes equipment to test deep-sea oil wells, would help Halliburton compete with larger rival Schlumberger Ltd. by adding production testing to its services, said Brad Handler, an analyst at Wachovia Securities Inc. in New York who rates Halliburton shares at ``buy'' and doesn't own the stock. The process tests the actual fluid produced by a well to gather information about the reservoir, Handler said.

``It does make some sense, because Halliburton would be able to really build a bit of a position in production testing,'' he said. ``It's a stand-alone business which has gained traction as you're dealing with these very expensive wells.'' Oil futures in New York have risen 86 percent in the past year, prompting oil companies to drill deeper, more expensive wells in their search for supplies. Companies owned by oil-rich countries, seeking to keep a larger share of revenue, are hiring Halliburton, Schlumberger and other contractors to do work previously handled by international giants such as Exxon Mobil Corp., which require a stake in a project.

Expro gained 70 pence, or 4.8 percent, to 1,515 pence at 4:20 p.m. in London trading. Halliburton rose $1.95, or 4.3 percent, to $47.10 at 11:49 a.m. in New York Stock Exchange composite trading.

Halliburton Advantage
Expro yesterday agreed to an offer from a group led by London-based private-equity firm Candover, along with a unit of Goldman Sachs Group Inc. Candover said in a statement today it has built up a 7.8 percent stake in Reading, England-based Expro.

Halliburton may have an advantage over Candover because it can cut costs more by combining Expro's operations with its own, said Keith Morris, an analyst at Evolution Securities Ltd. in London. ``You'd expect the synergies and all the other benefits flowing from a trade buyer to outweigh those of a private-equity buyer,'' Morris said.

Expro trades at about 11.9 times earnings before interest tax, depreciation and amortization, less than rival Technip SA's multiple of 14.9 times earnings and John Wood Group Plc's 12.05 times multiple.

Year's Biggest
If Candover's offer succeeds, the purchase would be the biggest leveraged buyout in Europe this year, exceeding the 1.2 billion-pound takeover of landfill operator Biffa Plc by a group led by Montagu Private Equity LLP in February. Buyout firms are targeting smaller investments as the cost of loans for financing deals has surged following the U.S. subprime mortgage crisis.

Takeovers of companies that make drilling equipment or provide services for energy producers are heading for the second-busiest year in five, with more than $45 billion of deals announced so far, according to Bloomberg data. First Reserve Corp., the biggest private-equity investor specializing in the energy industry, in December agreed to buy Scottish drilling company Abbot Group Plc for 906 million pounds.

Schlumberger Chief Executive Officer Andrew Gould said today that the market for mergers and acquisitions was overvalued, and that his company planned no major takeovers.

``We have assumed the same level of acquisitions we have been practicing over the last three or four years,'' Gould told analysts on a conference call to discuss first-quarter earnings. ``I don't think you'll see us make a major acquisition, particularly at these valuations.''
Group Plc with a bid that would top Candover Partners Ltd.'s 1.61 billion-pound ($3.2 billion) offer.

Source: Bloomberg|by Edward Evans and Ambereen Choudhury

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