Finning International Inc. has signed a $145 million deal to acquire Collicutt Energy Services Ltd. and accelerate growth in its Alberta oil field parts and service business.
VANCOUVER
Finning International Inc. has signed a $145 million deal to acquire Collicutt Energy Services Ltd. and accelerate growth in its Alberta oilfield parts and service business.
Finning Canada president Ian Reid said the acquisition of 450-employee Collicutt avoids the increasingly high cost of building new facilities and hiring skilled workers in Alberta and moves ahead the company’s growth plan by a couple of years.
“We’ve been very challenged in terms of keeping up to customer expectations and taking advantage of all the huge opportunities that are available to us in the heavy equipment industry in Western Canada,” Reid said this week.
“Today we are still missing opportunities simply because we haven’t sufficient numbers of people to satisfy the customer demand.”
Finning has set a goal of doubling its parts and service business by 2010.
Collicutt has 15 locations in Western Canada and the western United States, including a key 200,000-square-foot facility in Red Deer, Alta. The company fabricates and services natural gas compression and electric power generation equipment, mainly in Alberta.
Reid said the plan is to use the Red Deer plant to assemble all but the largest of its mining trucks, tractors and other heavy equipment. Finning estimated it will save up to $12 million by acquiring Collicutt rather than building similar new facilities.
Finning is offering $9.75 in cash or 0.325 of a common share for each Collicut share, or a combination of cash and stock. Up to 1.7 million Finning shares may be issued.
The Collicutt board endorsed the takeover bid, and chairman and CEO Steven Collicutt said: “There’s no doubt that Finning will make great use of the Collicutt facilities and our people.”
Steven Collicutt and other insiders owning a total of 82 per cent of the company have undertaken to accept the Finning proposal.
Steven Collicutt will acquire the company’s sales and service activities in California and its used oilfield equipment business in Rimbey, Alta., for $11 million.
Desjardins analyst Benoit Poirier said Collicutt has historically been focused on the Western Canadian market, but has recently begun expanding into the U.S.
“Finning will be able to offer its customers a more rounded product offering, and benefit from growing customer support services,” Poirier wrote in a note to clients.
DCN News Services
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