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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) October 12, 1998
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Nabors Industries, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-9245 93-0711613
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(Commission File Number) (I.R.S. Employer Identification No.)
515 West Greens Road, Suite 1200, Houston, Texas 77067
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(Address of Principal Executive Offices) (Zip Code)
(281) 874-0035
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On October 12, 1998, Nabors Industries, Inc. ("Nabors") sent a letter
to the Board of Directors of Pool Energy Services Co. ("Pool") containing a
proposal to acquire all of the outstanding shares of Pool at a price of $12.50
per share, payable at least 51% in Nabors stock and the remainder in cash.
Nabors also offered to consider offering a higher price if Pool's Board could
demonstrate additional value from that discernable from publicly available
information. Nabors offered to meet with representatives of Pool to work
together to structure a transaction acceptable to Pool's Board. By letter dated
October 26, 1998, Pool's Board rejected the offer, indicating that Pool was not
interested in pursuing the discussions with Nabors proposed in the October 12
letter, and that Pool was committed to implementing its own strategic plans.
On October 28, 1998, Nabors urged Pool to reevaluate the proposal
pursuant to which Nabors would acquire all the outstanding shares of Pool for
consideration equal to 0.481 Nabors shares and $6.125 in cash for each
outstanding share of Pool, having an implied value of $14.72 per Pool share
based on Nabors' closing stock price on October 27, 1998. Nabors reiterated its
offer to consider offering a higher price if Pool's Board could demonstrate
additional value. Nabors issued a press release on October 30, 1998, announcing
its proposal and setting forth the text of the October 28 letter.
Copies of the letters and press release are attached hereto as Exhibits
99.1, 99.2, 99.3 and 99.4, respectively, and are incorporated by this reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit 99.1 Letter from Nabors Industries, Inc. to the Board of
Directors of Pool Energy Service Co. dated October 12,
1998.
Exhibit 99.2 Letter from J. T. Jongebloed, President and Chief
Executive Officer of Pool Energy Service Co., to Nabors
Industries, Inc. dated October 26, 1998.
Exhibit 99.3 Letter from Nabors Industries, Inc. to the Board of
Directors of Pool Energy Service Co. dated October 28,
1998.
Exhibit 99.4 Nabors Industries, Inc. Press Release dated October 30,
1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NABORS INDUSTRIES, INC.
(Registrant)
Date: October 30, 1998 By: /s/ Anthony G. Petrello
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Anthony G. Petrello
President and Chief Operating Officer
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EXHIBIT INDEX
Exhibit 99.1 Letter from Nabors Industries, Inc. to the Board of
Directors of Pool Energy Service Co. dated October 12,
1998.
Exhibit 99.2 Letter from J. T. Jongebloed, President and Chief
Executive Officer of Pool Energy Service Co., to Nabors
Industries, Inc. dated October 26, 1998.
Exhibit 99.3 Letter from Nabors Industries, Inc. to the Board of
Directors of Pool Energy Service Co. dated October 28,
1998.
Exhibit 99.4 Nabors Industries, Inc. Press Release dated October 30,
1998.
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EXHIBIT 99.1
[LOGO] NABORS INDUSTRIES 515 West Greens Road
Eugene M. Isenberg Suite 1200
Chairman Houston, Texas 77067-4525
Chief Executive Officer 281-874-0035
October 12, 1998
CONFIDENTIAL
The Board of Directors of
Pool Energy Services Co.
10375 Richmond Avenue
Houston, Texas 77042
Dear Mr. Jongebloed:
We recently raised with your outside advisor the potential benefits to our
respective stockholders, employees and customers of a combination of our two
companies. While you have informed us that you believe now is not an appropriate
time for a combination, we believe that the current environment causes the
combination to make eminent business sense for both companies.
The strategic direction of both Pool and Nabors is complementary. Each company
operates drilling and workover platform rigs in the Gulf of Mexico and
internationally as well as land drilling operations in Alaska and
internationally, including Saudi Arabia. A combination of the two companies can
lead to economies of scale that offer the prospect of significant purchasing,
operating and other efficiencies. Nabors' offshore presence would also offer
significant opportunities for marketing Pool's Sea Mar Fleet.
In times of uncertainty, stockholders, employees and customers will benefit from
a larger, stronger and better-capitalized company. I think most industry
observers would also agree with this premise. For this reason, we propose
putting our two companies together and believe that such a combination is in the
best interest of the stockholders of both companies.
We would like to submit to your Board a merger proposal under which Nabors would
acquire all of the outstanding shares of Pool at a price of $12.50 per share.
This consideration would be payable at least 51% in stock (to preserve tax free
treatment) and the remainder in cash. This structure offers those stockholders
interested in retaining a long-term position the prospect of participating in
future upside prospects that are materially enhanced as a result of the
transaction and of growth with the benefit of an over 50 percent premium. At the
same time, stockholders electing cash will recognize an immediate substantial
premium over current market.
Your management team has clearly been a major contributor to the Company's
success. We believe that there will be continuing roles for key management that
will offer greater responsibilities and increased opportunities in the context
of a substantially larger company.
While we know your business well, our proposal is based on public information.
If you can demonstrate additional value, we would consider offering a higher
price.
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Nabors' Board of Directors has unanimously approved our proposal. Our financial
advisors and bank lenders have assured us that financing is available to meet
all transaction requirements. Our legal advisors and we have also carefully
studied any potential antitrust issues raised by a combination of our two
companies, and we are confident that any necessary approvals for the transaction
can be obtained without any undue delay. Our proposal is of course subject to
negotiation of a definitive merger agreement containing customary terms and
conditions. We are prepared to immediately commence negotiating a definitive
acquisition agreement between our companies and to consummate the agreement in
an expeditious manner.
My intent in sending this letter is to provide you with information about our
contemplated proposal and to express our desire to work together with you to
structure a transaction acceptable to your Board. We do not believe this letter
requires you to make any public disclosure and we do not intend to make it
public at this time. We would hope that at this point you would be prepared
immediately to commence discussions on a confidential basis between us.
We would like to meet with you and your representatives to discuss our proposal
and to answer any questions that you may have. Please contact my office
(281-775-8077) to let me know when we can get together. We would appreciate
receiving your views as to our contemplated proposal no later than October 23,
1998.
Sincerely,
/s/ Eugene M. Isenberg
Eugene M. Isenberg
Chairman and Chief Executive Officer
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EXHIBIT 99.2
[LOGO] POOL ENERGY SERVICES CO.
P.O. Box 4271 o Houston, TX 77210
10375 Richmond Avenue (77042)
JIM JONGEBLOED
President and
Chief Executive Officer
October 26, 1998
CONFIDENTIAL
Mr. Eugene M. Isenberg
Chairman and Chief Executive Officer
Nabors Industries, Inc.
515 West Greens Road, Suite 1200
Houston, Texas 77067-4525
Dear Mr. Isenberg:
My fellow directors and I have carefully considered your October 12,
1998 letter, and I have been instructed by our Board to tell you that we are not
interested in pursuing the discussions with your company suggested in that
letter. We want you to know that this decision is unanimous and unequivocal.
As you may know, our Company is committed to the implementation of its
own strategic plan, which is designed to capitalize on opportunities for the
Company and to increase shareholder values over the long term. We believe the
results of these efforts to date have been impressive. But for the current
unexpected downturn in our industry, which is the worst in many years, we
believe our stock price would better reflect the efforts and achievements of our
Board and management.
We regard your letter as an expression of confidence in our Company,
and we are happy that you share our views concerning our Company's excellent
prospects.
You and your company have our best wishes.
Yours very truly,
/s/ J. T. Jongebloed
J. T. Jongebloed
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EXHIBIT 99.3
[LOGO] NABORS INDUSTRIES 515 West Greens Road
Eugene M. Isenberg Suite 1200
Chairman Houston, Texas 77067-4525
Chief Executive Officer 281-874-0035
October 28, 1998
CONFIDENTIAL
The Board of Directors of
Pool Energy Services Co.
10375 Richmond Avenue
Houston, Texas 77042
Dear Mr. Jongebloed:
On October 12, 1998, I wrote to you proposing a combination of Nabors and Pool
in which Nabors would acquire all of the outstanding shares of Pool for
consideration consisting of 51% Nabors stock and 49% cash, with an implied value
at that date of $12.50 per Pool share. This offer represented a 77% premium to
Pool's closing stock price of $7.06 per share on October 9, 1998, the last
trading day prior to our proposal. On October 26, 1998, we received a letter
from you stating that Pool was not interested in pursuing discussions with
Nabors. In view of the superior value inherent in our proposal, we were
surprised that your Board of Directors could have concluded unanimously and
unequivocally not to discuss our proposal. Had our proposal been accepted on
October 12, your shareholders would have received consideration with a blended
value today of $14.72 based on the ratios implied by our offer price of $12.50
and Nabors' closing price on October 9 of $13.25. We continue to believe that a
business combination based on these values is in the best interests of Pool and
its shareholders.
In your letter, you refer to Pool's commitment to the implementation of its own
strategic plan, which is designed to increase shareholder value over the
long-term. We are convinced that this plan cannot outperform the benefits of a
combination of Pool and Nabors given the high fragmentation of our industry, the
economies of scale which will be realized through the combination and the
enhanced capital structure of the combined entities. As a result, we believe
that a combination of our companies will maximize the long-term value to be
realized by your shareholders.
Given the strong benefits of a combination of Pool and Nabors, we encourage you
to reevaluate our proposal to enter into a merger in which Nabors would acquire
all of the outstanding shares of Pool for consideration equal to 0.481 Nabors
shares and $6.125 in cash for each outstanding Pool share. As stated above, this
offer implies a value of $14.72 per Pool share based on Nabors' closing stock
price on October 27, 1998. In addition, as we indicated in our letter of October
12, our proposal is based on public information and, if you can demonstrate
additional value, we would consider offering a higher price.
We are hopeful that Pool's management and Board of Directors want to act in the
best interests of the company's shareholders. We also firmly believe that your
shareholders would welcome our proposal, and we are committed to affording them
the opportunity to do so. Based on the unusually high trading volume in Pool's
shares subsequent to our October 12 letter, it is in both our interests to
discuss this matter quickly. I will call you tomorrow to discuss our proposal.
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Sincerely,
/s/ Eugene M. Isenberg
Eugene M. Isenberg
Chairman and Chief Executive Officer
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EXHIBIT 99.4
NABORS INDUSTRIES MAKES $14.72 PER SHARE CASH AND STOCK PROPOSAL
TO POOL ENERGY SERVICES BOARD
HOUSTON, Texas, October 30, 1998 - Nabors Industries, Inc. (ASE: NBR) announced
today that it made a proposal to the Board of Directors of Pool Energy Services
Co. (NASDAQ: PESC) to acquire all of the outstanding shares of Pool common stock
for consideration of 0.481 shares of Nabors common stock and $6.125 in cash for
each outstanding Pool share. The proposal implies a value of $14.72 per Pool
share based on Nabors' closing stock price of $17.875 on October 27, 1998. The
proposed merger transaction would have a total value of approximately $486
million, including assumed net liabilities.
On October 12, 1998, following several unsuccessful conversations with Pool
representatives, Nabors proposed by letter to the Pool Board of Directors a
combination of Nabors and Pool. The proposed consideration represented a 77%
premium to Pool's closing stock price of $7.06 per share on October 9, 1998, the
last trading day prior to Nabors' proposal. In a letter to Nabors dated October
26, 1998, Pool's chairman and chief executive officer, James T. Jongebloed, said
that Pool's Board had rejected the proposal, noting that its decision was
"unanimous and unequivocal" and that Pool was "not interested in pursuing the
discussions" with Nabors.
In making today's announcement, Eugene M. Isenberg, chairman and chief executive
officer of Nabors, said, "We are determined to effect a combination of Nabors
and Pool. We believe that our two companies would be a superb fit. The strategic
direction of both Nabors and Pool is complementary. Each company operates
drilling and workover platform rigs in the Gulf of Mexico and internationally as
well as land drilling operations in Alaska and internationally, including Saudi
Arabia."
"The combination of our companies would provide substantial benefits to
shareholders, employees and customers of both companies. A combination of Nabors
and Pool would lead to economies of scale that offer the prospect of significant
purchasing, operating and other efficiencies -- leading to lower costs, reduced
capital expenditure requirements and enhanced equipment utilization. Nabors'
offshore presence also offers significant opportunities for marketing Pool's Sea
Mar fleet. Finally, we believe that there will be continuing roles for key
management that will offer greater responsibilities and increased opportunities
in a substantially larger company," continued Mr. Isenberg.
"We were surprised that Pool's Board rejected our proposal without holding any
discussions with us and we are disappointed that Pool's Board has declined our
repeated offers to discuss this powerful combination. We believe that together
Nabors and Pool will outperform Pool's `strategic plan' and will maximize value
for Pool shareholders over the near- and long-term. As we have indicated in our
letters to Pool's Board, because our proposal is based on publicly available
information, we would consider offering a higher price if Pool can demonstrate
additional value," concluded Mr. Isenberg.
Nabors purchased 867,500 shares of Pool's common stock in June 1994, and
currently owns 1,022,500 shares, or 4.8%, of Pool's common stock. As a result of
Nabors' June 1994 investment, Pool announced a strategic plan and the adoption
of a poison pill in that same month. Since the implementation of Pool's
strategic plan, the S&P Oil Well Services & Equipment Index has increased 77%
and Nabors' stock price has increased 165% while Pool's stock price has only
increased 20%. Furthermore, Pool's stock price has increased an average of less
than 1% per year since its initial public offering at $10.25 per share on April
17, 1990.
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Following is the full text of the letter that was sent from Mr. Isenberg to Mr.
Jongebloed and other members of Pool's Board of Directors:
October 28, 1998
The Board of Directors of
Pool Energy Services Co.
10375 Richmond Avenue
Houston, Texas 77042
Dear Mr. Jongebloed:
On October 12, 1998, I wrote to you proposing a combination of Nabors
and Pool in which Nabors would acquire all of the outstanding shares of
Pool for consideration consisting of 51% Nabors stock and 49% cash, with
an implied value at that date of $12.50 per Pool share. This offer
represented a 77% premium to Pool's closing stock price of $7.06 per
share on October 9, 1998, the last trading day prior to our proposal. On
October 26, 1998, we received a letter from you stating that Pool was
not interested in pursuing discussions with Nabors. In view of the
superior value inherent in our proposal, we were surprised that your
Board of Directors could have concluded unanimously and unequivocally
not to discuss our proposal. Had our proposal been accepted on October
12, your shareholders would have received consideration with a blended
value today of $14.72 based on the ratios implied by our offer price of
$12.50 and Nabors' closing price on October 9 of $13.25. We continue to
believe that a business combination based on these values is in the best
interests of Pool and its shareholders.
In your letter, you refer to Pool's commitment to the implementation of
its own strategic plan, which is designed to increase shareholder value
over the long-term. We are convinced that this plan cannot outperform
the benefits of a combination of Pool and Nabors given the high
fragmentation of our industry, the economies of scale which will be
realized through the combination and the enhanced capital structure of
the combined entities. As a result, we believe that a combination of our
companies will maximize the long-term value to be realized by your
shareholders.
Given the strong benefits of a combination of Pool and Nabors, we
encourage you to reevaluate our proposal to enter into a merger in which
Nabors would acquire all of the outstanding shares of Pool for
consideration equal to 0.481 Nabors shares and $6.125 in cash for each
outstanding Pool share. As stated above, this offer implies a value of
$14.72 per Pool share based on Nabors' closing stock price on October
27, 1998. In addition, as we indicated in our letter of October 12, our
proposal is based on public information and, if you can demonstrate
additional value, we would consider offering a higher price.
We are hopeful that Pool's management and Board of Directors want to act
in the best interests of the company's shareholders. We also firmly
believe that your shareholders would welcome our proposal, and we are
committed to affording them the opportunity to do so. Based on the
unusually high trading volume in Pool's shares subsequent to our October
12 letter, it is in both our interests to discuss this matter quickly. I
will call you tomorrow to discuss our proposal.
Sincerely,
/s/ Eugene M. Isenberg
Eugene M. Isenberg
Chairman and Chief Executive Officer
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Nabors actively markets over 400 land drilling rigs worldwide. Offshore, the
Company operates 25 platform rigs, six jack-ups and two barge drilling rigs. The
Company participates in most of the significant oil, gas and geothermal drilling
markets in the world. Nabors also manufactures top drives and drilling
instrumentation systems and provides comprehensive oilfield engineering, civil
construction, logistics and facility maintenance and project management
services.
# # #
The information above includes forward-looking statements within the meaning of
the Securities Act of 1933 and the Securities Exchange Act of 1934. These
statements are based upon certain assumptions and analyses made by the Company,
in light of its experience, and its perception of historical and future trends,
on general economic and business conditions; and on numerous other factors,
including expected future developments, many of which are beyond the control of
the Company. Such forward-looking statements are also subject to certain risks
and uncertainties, as disclosed by the Company from time to time in its filings
with the Securities and Exchange Commission. As a result of these factors, the
Company's actual results may differ materially from those indicated in or
implied by such forward-looking statements.
Contacts: Nabors Industries, Inc. Abernathy MacGregor Frank
Dennis A. Smith Andrew Brimmer / Dan Katcher
(281) 874-0035 (212) 371-5999
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