Dril-Quip has entered into an agreement to acquire Houston-based TIW Corp. for approximately US$143 million, subject to closing adjustments.
TIW is a 100-year old manufacturer of consumable downhole products for the global oil and gas market, which provides liner hanger systems and related equipment and services worldwide.
TIW is being acquired on a debt-free, cash-free basis and Dril-Quip intends to fund the consideration with cash on hand. Dril-Quip anticipates synergies to be realized from this transaction, primarily driven by cost efficiencies as well as expanded sales opportunities. The transaction is subject to regulatory approvals and other customary closing conditions. It is anticipated that the closing of the transaction will occur during Q4 2016.
TIW reached peak revenues of approximately $140 million in 2014. Revenue is expected to trough between $60 million and $70 million in 2016 and is expected to increase to between $80 million and $100 million by 2018. EBITDA margins are expected to be similar to Dril-Quip's margins once synergies are realized.
Blake DeBerry, Dril-Quip's president and CEO said: "We are pleased to include TIW Corporation as part of the Dril-Quip family, and look forward to significantly expanding our product offerings to our customers. TIW has a long history of success as a family-owned company and we intend to preserve that legacy by continuing to reliably serve our customers with our combined teams around the world. TIW is a market leader in the liner hanger business and we are particularly excited about its expandable liner hanger technology that is frequently utilized in deepwater or high pressure/high temperature environments.
Evercore served as Dril-Quip's exclusive financial advisor and PPHB served as TIW's exclusive financial advisor for this transaction.