Frank’s will use $75 million in cash to purchase the Lafayette-based company. Potentially, another $20 million will be paid later, in two separate installments of $10 million, based on market conditions. In other words, the pending payment, called an earnout, is contingent on the U.S. land rotary rig count, as reported by Baker Hughes, exceeding certain targets from the fourth quarter of 2015 through the second quarter of 2017.
Timco Services is co-owned by Lafayette entrepreneur/real estate investor Mike Maraist and his business partner Mark Guidry.
Frank’s has also agreed to pay to an additional $8 million to cover Timco’s estimated tax implications due to the way the transaction is structured.
The acquisition is scheduled to close in the second quarter of 2015, subject to regulatory approval and other customary closing conditions.
“We are pleased to have entered into an agreement to acquire Timco as we believe this transaction is a unique opportunity to expand our presence in the U.S. land market and demonstrate our commitment to our core business,” Gary Luquette, president and chief executive officer of Frank’s International (NYSE:FI), said in a press release announcing the definitive agreement. “Timco is a premium provider of tubing and casing services in several key geographic areas, including the Eagle Ford Shale, the Permian’s Delaware Basin, the Haynesville Shale and the U.S. Gulf Coast, with an operating model that closely mirrors Frank’s International. This is a great strategic fit.”
“By joining forces with Frank’s International and gaining access to its proprietary technology, we will significantly improve our quality and breadth of services to our clients. Additionally, Frank’s International represents an excellent new home for Timco’s highly skilled and experienced employees,” Guidry, who serves as Timco's president, said in the release. Guidry will be retained as vice president of Frank’s South Texas operations.
Neither Maraist nor Guidry could be immediately reached for comment on the deal and how the downturn in the oilfield may have affected the decision to sell at this time. With the price of oil cut in half to below $50 since June, many more mergers are anticipated throughout the industry.
Frank's International spokesman Josh Grodin tells ABiz Maraist will "remain on as a consultant and will assist with transition issues, including integration, customer relationships, employee relationships, etc." Grodin did not specify a time period.
While it does not appear that Maraist will be hanging around Frank’s for very long once the deal is done, he will remain an active member of the Lafayette business community. His primary local holding is Le Triomphe Golf & Country Club, and he also is the longtime chairman of Home Bank (at age 24, he served as president of Acadiana Bank in Eunice). Additionally, he has business interests in Beaumont, along with a significant portfolio of real estate holdings.
Said to always be looking down the road for a new challenge, Maraist isn’t likely to sit still once this buyout if finalized. “He is an absolute optimist, he really is,” attorney Jack Castle, a close friend who also handles some of Maraist’s legal work, told ABiz for a 2008 story on the local businessman.
Simmons & Company International acted as Frank’s financial adviser, and Vinson & Elkins represented the company in connection with the transaction.
Founders Investment Banking was Timco’s financial adviser, and Butler Snow represented Timco in connection with the transaction.