Nabors Industries Ltd. (NYSE: NBR) said Aug. 14 it agreed to acquire Houston-based Tesco Corp. (NASDAQ: TESO) in an all-stock merger further consolidating the oilfield services industry.

Nabors, headquartered in Hamilton, Bermuda, expects the roughly $216 million acquisition of Tesco to accelerate growth and strengthen its financial position in a transaction that Mike Kelly, senior analyst with Seaport Global Securities LLC, considers a “rare win-win in oil patch consolidation.”

As part of an arrangement agreement, Nabors will acquire all of Tesco’s issued and outstanding common shares in exchange for 0.68 of Nabors common shares. The transaction implies a value for Tesco’s stock of $4.62 per share—or a 19% premium to close on Aug. 11, according to the company press release.

Additionally, Nabors plans to combine its rig equipment subsidiary, Canrig, with Tesco’s rig equipment manufacturing, rental and aftermarket service business, which fits into the company’s strategy of using the rig as the delivery platform.

“The addition of Tesco’s tubular running services business accelerates the growth of Nabors Drilling Solutions, a key initiative in Nabors’ efforts to provide a more integrated offering and drive higher revenue per rig in a flattening rig count/day-rate environment,” Kelly said in an Aug. 14 report. “It also takes out a competitor in the top-drive market.”

From Tesco’s perspective, Kelly said the company, which is currently debt free, immediately gains scale which is “increasingly critical in a lower-for-longer oil world.”

“The pace of innovation in rig and oilfield technology is accelerating and Tesco made the tough [but correct] decision to maintain its global footprint and R&D efforts through the downturn, a path that would have been increasingly difficult over in the long-term for a company its size,” he said.

Nabors expects first-year operating synergies from the Tesco acquisition to reach $20 million with full run-rate operating synergies of $30 million to $35 million as well as capital savings from facility rationalization and the planned build out of our casing running operation, said Anthony G. Petrello, Nabors’ chairman, president and CEO.

Petrello said Nabors concluded several years ago that the drilling rig will serve as the delivery platform for future rig services.

“The early success of our service integrations efforts [is] substantiating this strategy,” he said in a statement. “Now, with the largest land drilling fleet and with the automation features of our Rigtelligence operating system, Nabors is uniquely positioned to further deploy Tesco’s premium casing running tools and automation technologies globally.”

The transaction has been approved by the boards of directors of both companies and is subject to approval by Tesco shareholders and the satisfaction of customary closing conditions and regulatory approvals. The companies expect to close the deal in fourth-quarter 2017.

Intrepid Partners was Nabors’ exclusive financial adviser. Milbank, Tweed, Hadley, & McCloy LLP and Stikeman Elliott LLP were legal advisers to Nabors. J.P. Morgan Securities LLC was Tesco’s exclusive financial adviser and Norton Rose Fulbright was its legal adviser.

Emily Patsy can be reached at epatsy@hartenergy.com.

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