Dril-Quip Inc. and Innovex Downhole Solutions Inc. have agreed to merge in an all-stock transaction that will create a global onshore and offshore service company, according to a March 18 press release.

Dril-Quip is a publicly traded company with a market capitalization of more than $800 million. Innovex is majority owned by funds affiliated with Amberjack Capital Partners.  Under the terms of the transaction, Dril-Quip stockholders will own approximately 52% and Innovex stockholders will own approximately 48% of the combined company on a fully diluted basis.

After the deal closes, the combined company will be called Innovex International and its common stock is expected to trade on the New York Stock Exchange under a new ticker symbol, INVX, according to the press release. The combined company will be headquartered in Houston.

The combined company is expected to derive approximately 56% of its revenue from the international and offshore markets and approximately 44% from the North American onshore markets in the U.S. and Canada, Dril-Quip said. The new company anticipates generating annual revenue in excess of $1 billion with adjusted EBITDA of $221 million. The financial figures include synergies based on a pro forma, full-year 2023 combined basis. Innovex International will, on a pro forma, year-end 2023 basis, have a net cash position of $99 million.

Dril-Quip said the combination is anticipated to boost EBITDA margins by more than 20% with synergies cutting costs by approximately $30 million within 24 months of closing. The deal also will accelerate Dril-Quip’s onshore Canadian wellhead business and increase the company’s footprint across several growing markets including Saudi Arabia, Mexico, South America and the Asia Pacific region.

Jeffrey Bird, Dril-Quip president and CEO, said: the transaction is aligned with the growth strategy “we have been pursuing and will advance our position as a leading developer and provider of highly engineered and innovative equipment, services and technologies for the global oil and gas industry.”

The two companies’ complementary global scale and product breadth will also provide a strong platform for organic revenue growth, strong EBITDA margins and the potential for significant free cash flow generation to drive value for our stockholders, Bird said.

Innovex CEO Adam Anderson said the combination will create a “unique energy industrial platform with durable margins, low capital intensity and the potential for superior returns on capital throughout industry cycles.”

Upon closing, the combined company’s board o will consist of nine directors, including four independent directors from the current Dril-Quip board, four directors from Innovex. Anderson will head the new company as CEO, with John V. Lovoi, Dril-Quip’s current board chair, serving as board chair of the combined company.

Citi is serving as lead financial adviser and Morgan Stanley & Co. LLC is serving as co-financial adviser to Dril-Quip. Gibson, Dunn & Crutcher LLP is serving as Dril-Quip’s legal adviser.

Goldman Sachs & Co. LLC is serving as lead financial adviser and Piper Sandler Cos. is serving as co-financial adviser to Innovex. Akin Gump Strauss Hauer & Feld LLP is serving as Innovex’s legal adviser with assistance from Paul Hastings LLP.

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