6309 Monarch Park Place, Suite 203
Niwot, CO 80503, USA
Phone (303) 443-5060
Toll free (888) 742-5060
Wilson, headquartered in Houston, Texas, is a distributor of pipe, valves, fittings and mill, safety and other maintenance products to energy and industrial markets through about 120 branches in the U.S. and internationally. Wilson generated sales of US$730.4 million for the year ended Dec. 31, 2003. Franklin had 2003 sales of C$259 million. If combined, sales of CE Franklin and Wilson for the 12 months ended Mar. 31, 2004, would have approached U.S. $1 billion.
'After several quarters of steadily improving distribution results, including the second quarter of 2004, we felt that now is the time to combine these two businesses into a single publicly traded entity,' Smith Chairman and Chief Executive Doug Rock said in a prepared statement.
'The transaction will create a leading North American distributor of products and services to energy and industrial markets, and provide a solid platform for international revenue growth', said Michael West, president and CEO of CE Franklin, who will manage the combined entity. 'The combination and integration of the extensive distribution networks and talented employees of both companies would present a number of opportunities to improve efficiency and enhance our product offering, thereby creating value for all of our key stakeholders - customers, employees vendors and shareholders.
'CE Franklin and Wilson have been successful in joint marketing initiatives in the past, most recently winning a major North America maintenance, repair and operating supply agreement with a North American exploration and production company that is expected to generate annual revenue of Cdn. $20 million in Canada, and U.S. $15 million in the U.S. The combination of CE Franklin and Wilson create a company that will be well-positioned to pursue significant North America- wide and international supply arrangements going forward.'
A special committee of the independent members of the Board of Directors of CE Franklin has been formed to consider and make a recommendation to the Board of the transaction. The transaction is a related party transaction under Canadian securities law by virtue of Smith's current 55% shareholdings in CE Franklin. The special committee has retained CIBC World Markets as its financial advisor.
It is anticipated that Smith would own approximately 90% of the common shares of CE Franklin as a result of the transaction. Smith has advised CE Franklin that their intent is to reduce their ownership interest to the 55% level held today, the timing of which will depend on the market conditions and other factors.
About CE Franklin
CE Franklin distributes products and related services to the Canadian oil and gas industry, including projects involving drilling and completions, production and maintenance and capital construction. It has 37 branches across Canada.