Nabors Industries (NBR) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition expands Nabors' high-margin, technology-driven drilling solutions and diversifies revenue streams, aligning with long-term strategy.

• Parker Wellbore brings a strong international presence, especially in the U.S., Saudi Arabia, and UAE, and enhances Nabors' global footprint and market positioning.

• The deal adds Quail Tools to the portfolio, strengthening surface and tubular rentals and supporting trends toward longer lateral wells.

• Parker's experienced management, healthy balance sheet, and established service lines support growth in strategic geographies.

• Parker's customer base and motivated sales force provide cross-selling opportunities and deeper market penetration.

Financial terms and conditions

• Nabors will acquire Parker for 4.8 million shares, valued at approximately $472 million, and assume $100 million in net debt, subject to a share price collar.

• Transaction multiple is 2.6x EBITDA before synergies and 2.2x after expected cost synergies.

• Parker's normalized 2024E EBITDA is projected at $180 million; combined adjusted EBITDA estimated at $1,107 million.

• Most shares are subject to a 90-day lockup post-closing.

• The deal is immediately accretive to adjusted free cash flow and improves leverage metrics.

Synergies and expected cost savings

• Up to $35 million in annualized cost synergies expected from reduced overhead, facility consolidation, and procurement savings, with most realized within 12 months post-closing.

• Integration of casing running and drill pipe rental businesses aims to improve margins and yield further efficiencies.

• Quail Tools' higher EBITDA margin is expected to be accretive to NDS margins.

• Potential for further synergy growth over time.

• Combined operations expected to deliver improved leverage and interest coverage ratios.