Innovex abandons IPO to merge with Dril-Quip

Dril-Quip, a publicly-traded company, is to merge with PE-backed Innovex. Both companies are in oilfield services, and both have their head office in Houston.



It is an all-stock transaction with Dril-Quip shareholders owning 52% of the combined company. However, the company will be renamed Innovex International and the Innovex CEO and CFO will hold those roles in the combined company. Innovex had filed to go public in January 2024.

Dril-Quip has a market capitalization of $825 million and revenues of $478 million and adjusted EBITDA of $59 million. Innovex has revenues of $556 million and adjusted EBITDA of $132 million.

Complementary overlap of products

Dril-Quip was formed in 1981 and went public in 1997. It started out producing oilfield equipment to be used offshore (either subsea or on offshore platforms). In 2023, it purchased a Canadian wellhead business for $80 million to increase its onshore presence.

Innovex was formed in 2016 through the merger of three oilfield service companies that were separately owned by Intervale Capital. The companies were primarily involved in downhole tools and products, mostly onshore. Innovex has made a number of acquisitions since to increase its offshore and international presence. Intervale renamed itself to Amberjack Capital Partners in 2021.

Dril-Quip has its corporate office in NW Houston while Innovex is based in Humble. The company expects to achieve $30 million in synergy cost savings through removing duplicate corporate functions, manufacturing optimization and supply chain savings.

The new management

Adam Anderson will be the CEO of the combined business. He was the CEO of one of the three companies that merged to form Innovex. Kendal Reed, CFO of Innovex since 2019, will be CFO of the combined business. Prior to joining Innovex, he worked at Amberjack, the PE-firm and Piper Sandler investment bank.

Dril-Quip Executive Payout

Dril-Quip CEO Jeff Bird and CFO Kyle McClure don’t have roles in the combined business and will receive large payments following the change of control. The annual proxy statement for 2023 has not yet been released. According to the proxy filed for 2022, Mr. Bird would have been paid a package worth $10.2 million (assuming a termination date of December 31, 2022). For Mr. McClure, the equivalent figure was $4.8 million.

The deal is expected to close in the third quarter.

Investor Presentation – Dril-Quip Innovex

 

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