Allis-Chalmers ends buyout of Bronco Drilling

Business Materials 9 August 2008 04:53 (UTC +04:00)

Oilfield services company Allis-Chalmers Energy Inc ended its proposed acquisition of onshore driller Bronco Drilling Co on Friday because of "clear indications" that Bronco's shareholders were unhappy with the deal, Reuters reported.

"While Bronco management and its board of directors continue to believe in the strategic rationale supporting a combination with Allis-Chalmers, it now seems clear that it is unlikely we will achieve the requisite votes needed to approve the merger," Bronco Drilling Chief Executive Frank Harrison said in a statement released by both companies.

Bronco will pay Allis-Chalmers a termination fee of $4.5 million.

Allis-Chalmers originally agreed to buy the driller in January for $16.33 a share, or about $437.8 million. But the deal was unpopular with Bronco's shareholders, and Allis raised its bid to $18.25 a share in June.

Nevertheless, several of Bronco's largest shareholders, who together owned around 40 percent of the company's shares, said the offer was too low and they planned to vote against the deal.

Shareholders were scheduled to vote on the deal next week, but the companies said they have canceled their respective special meetings.

Bronco shares closed at $15.90 on the Nasdaq and Allis-Chalmers shares closed at $13.92 on the New York Stock Exchange.