Sandvik has reached an agreement to acquire Varel International Energy Services Inc. for approximately US$740 million. The closing of the acquisition is subject to standard regulatory approvals and certain environmental due dilligence.
Varel is a global supplier of drilling solutions focusing on drill bits, downhole products for well construction and well completion. The key customer segment is in the oil and gas sector, with some exposure to the mining and construction industries. The manufacturing sites are located in Houston, Matamoros (Mexico), Aberdeen, Tarbes (France), and Kurgan (Russia). The head office is based in Carrollton, Texas.
Revenues in 2013 were approximately US$340 million and number of employees about 1300. The acquisition is expected to be slightly accretive to earnings per share already in the first year. Varel will form a new product area within the business area Sandvik Venture.
"The acquisition forms a platform to enable Sandvik to enter into drilling solutions in the oil and gas sector. The combination of Varel’s solid market position and strong customer offering, and Sandvik’s broader drilling solutions capabilities as well as the extensive knowledge in highly relevant materials and cutting technology will support Varel's continued growth. I am very impressed by the Varel team and I am excited about our joint opportunities going forward", says Tomas Nordahl, president of Sandvik Venture.
“The acquisition continues to position Sandvik in attractive growth segments where we will deliver solutions that increase customers’ productivity. This is in line with Sandviks growth ambition and a way to leverage our technical know how and Varel’s market position”, says Olof Faxander, Sandvik’s president and chief executive officer.
Photo: Tomas Nordahl, President Sandvik Venture and Jim Nixon, President and CEO Varel International Energy Services
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