- Acquisition furthers DTI's growth strategy to be a premier
provider of quality solutions and services for the global oil &
gas drilling industry
- Integrating SDP's patented Drill-N-Ream® well bore
conditioning tool into DTI's fleet of technologies provides
expanded geographic market potential and is anticipated to lower
capital requirements and operating costs as well as improve
operational efficiencies
- Combining SDP's manufacturing expertise into DTI's
broad-reaching and well-established global sales
channels
HOUSTON and VERNAL,
Utah, March 7, 2024 /PRNewswire/ -- Drilling
Tools International Corp. ("DTI") (NASDAQ: DTI) and Superior
Drilling Products, Inc. ("SDP") (NYSE American: SDPI), today
announced they have entered into a definitive agreement under which
DTI agreed to acquire SDP for total consideration of approximately
$32.2 million payable in cash and DTI
stock. The transaction was unanimously approved by the Board of
Directors of DTI and SDP and a Special Committee of the Board of
Directors of SDP. The closing of the transaction is expected to
occur in the third quarter of 2024.
Wayne Prejean, CEO of DTI,
stated, "We are excited to welcome the hardworking and dedicated
workforce at Superior Drilling Products to the Drilling Tools
International family. Since 2016, DTI has served as the
exclusive North American distributor for the SDP's patented
Drill-N-Ream® well bore conditioning tool. We believe that
the Drill-N-Ream technology and SDP's best-in-class engineering,
design, and manufacturing capabilities are a perfect fit and a
natural extension of DTI's product and service offerings. By
aligning our interests through this merger, we expect to deliver
manufacturing and distribution savings. Importantly, we
expect to drive rental revenue with the Drill-N-Ream in the
Middle East by providing the scale
and resources to help grow that business.
"We believe this accretive acquisition is further validation of
the M&A framework and robust pipeline we have created to
rapidly consolidate the oilfield services rental tool industry.
The acquisition of SDP broadens our growth opportunities,
both domestically and internationally, with a particular focus on
expanding our presence in the Middle East. We are confident
that this partnership will drive innovation and enhance our product
offerings, and, as a result, we believe it will increase
shareholder value," added Mr. Prejean.
Troy Meier, SDP's Chairman and
CEO, added, "We have a well-established history with the DTI team
and believe they are the right partner to help us to further
penetrate the oil & gas industry with our highly effective well
bore conditioning tool. This strategic move represents a
tremendous opportunity to leverage our combined resources and
expertise to better serve our customers, drive innovation and
accelerate our growth domestically and internationally. We
believe this transaction delivers compelling value to our
stockholders and creates new opportunities for our employees as a
part of a larger, growing enterprise. We look forward to a
seamless transition as we embark on this new chapter for SDP."
SDP Fourth Quarter and Full Year 2023 Financial
Results
Superior Drilling Products will announce its 2023 results
in a separate release on March 7,
2024. The news release will be made available on SDP's
website. Due to the pending acquisition by DTI, SDP will
not host its earnings call previously scheduled for March 7, 2024 at 12:00
p.m. Eastern Time.
Advisors
Winston & Strawn LLP acted as legal advisor to DTI,
Ewing Jones, PLLC acted as legal
advisor to SDP, and Mayer Brown LLP acted as legal advisor to the
Special Committee of the Board of Directors of SDP. Energy Capital
Solutions, LLC served as financial advisor to DTI, and Piper Sandler & Co. served as exclusive
financial advisor to the Special Committee of the Board of
Directors of SDP.
About Drilling Tools International Corp.
DTI, with roots dating back to 1984, is a Houston, Texas based leading oilfield services
company that manufactures and rents downhole drilling tools used in
horizontal and directional drilling of oil and natural gas wells.
DTI operates from 16 locations across North America and has 4 International stocking
points across Europe and the
Middle East. To learn more about
DTI visit: www.drillingtools.com.
About Superior Drilling Products, Inc.
SDP is an innovative, cutting-edge drilling tool technology
company providing cost saving solutions that drive production
efficiencies for the oil and natural gas drilling industry. The
Company designs, manufactures, repairs, and sells drilling tools.
SDP drilling solutions include the patented Drill-N-Ream® well bore
conditioning tool and the patented Strider™ oscillation system
technology. In addition, SDP is a manufacturer and refurbisher of
PDC (polycrystalline diamond compact) drill bits for leading oil
field service companies. SDP operates a state-of-the-art drilling
tool fabrication facility, where it manufactures its solutions for
the drilling industry, as well as customers' custom products.
Additional information about the Company can be found at:
www.sdpi.com.
Additional Information for Superior Drilling Products, Inc.
Shareholders and Where to Find It
This press release relates to a proposed acquisition of Superior
Drilling Products, Inc. by Drilling Tools International
Corporation. In connection with the transaction, DTI will file a
registration statement on Form S-4 which will include a document
that serves as a prospectus of DTI and a proxy statement of SDP
(the "joint proxy statement/prospectus"), and each party will file
other relevant documents regarding the transaction with the
Securities and Exchange Commission (the "SEC"). INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE
SEC CAREFULLY AND IN THEIR ENTIRETY, INCLUDING THE SCHEDULE 13E-3,
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. A definitive joint proxy statement/prospectus will be
sent to stockholders of SDP. Investors and security holders will be
able to obtain free copies of the registration statement and the
joint proxy statement/prospectus and other relevant documents filed
with the SEC through the website maintained by the SEC at
http://www.sec.gov. Copies of the documents filed with the SEC by
DTI will be available free of charge on the DTI website at
www.drillingtools.com or by contacting DTI by email at
InvestorRelations@drillingtools.com or by mail at 3710
Briarpark Drive, Suite 150, Houston,
TX 77042. Copies of the documents filed with the SEC by SDP
will be available free of charge on the SDP website at
https://sdpi.com or by contacting SDP by email at
dpawlowski@keiadvisors.com or by mail at 1583 S. 1700 E.,
Vernal, UT 84078.
Participants in the Solicitation
DTI and SDP and their respective directors and executive
officers and other members of management and employees may be
deemed to be participants in the solicitation of proxies from the
SDP stockholders in connection with the proposed transaction.
Information about the directors and executive officers of DTI is
set forth in its Annual Report on Form 10-K for the year ended
December 31, 2022, which was filed
with the SEC on March 21, 2023, its
Proxy Statement for its 2023 Annual Meeting Stockholders, which was
filed with the SEC on May 18, 2023
and in other documents filed with the SEC by DTI and its executive
officers and directors. Information about the directors and
executive officers of SDP is set forth in its Annual Report on Form
10-K for the year ended December 31,
2022, which was filed with the SEC on March 16, 2023, its Proxy Statement for its 2023
Annual Meeting Stockholders, which was filed with the SEC on
June 30, 2023, its Quarterly Report
on Form 10-Q for the quarter ended September
30, 2023, which was filed with the SEC on November 14, 2023, and in other documents filed
with the SEC by SDP and its executive officers and directors.
These documents can be obtained free of charge from the sources
indicated above. Additional information regarding the participants
in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, will be
contained in the joint proxy statement/prospectus and Schedule
13e-3 and other relevant materials in connection with the
transaction to be filed with the SEC when they become available.
Information concerning the interests of the participants in the
solicitation, which may, in some cases, be different than those of
SDP's shareholders generally, will be set forth in the joint
prospectus/proxy statement relating to the proposed transaction and
the Schedule 13e-3 when they become available. Investors should
read the proxy statement/prospectus and Schedule 13e-3 carefully
before making any voting or investment decisions.
Forward-Looking Statements
This press release may include, and oral statements made from
time to time by representatives of the Company may include,
"forward-looking statements." Statements regarding the business
combination and the financing thereof, and related matters, as well
as all other statements other than statements of historical fact
included in this press release are forward-looking statements. The
words "anticipate," "believe," "continue," "could," "estimate,"
"expect," "intends," "may," "might," "plan," "possible,"
"potential," "predict," "project," "should," "will," "would" and
similar expressions may identify forward-looking statements, but
the absence of these words does not mean that a statement is not
forward looking. These forward-looking statements include, but are
not limited to, statements regarding the proposed transaction,
including any statements regarding the expected timetable for
completing the proposed transaction, benefits of the proposed
transaction, and DTI and its management team's expectations, hopes,
beliefs, intentions or strategies regarding the future. In
addition, any statements that refer to projections, forecasts or
other characterizations of future events or circumstances,
including any underlying assumptions, are forward-looking
statements. Forward looking statements in this press release may
include, for example, statements about: (1) the demand for DTI's
products and services, which is influenced by the general level
activity in the oil and gas industry; (2) DTI's ability to retain
its customers, particularly those that contribute to a large
portion of its revenue; (3) DTI's ability to remain the sole North
American distributor of the Drill-N-Ream; (4) DTI's ability to
employ and retain a sufficient number of skilled and qualified
workers, including its key personnel; (5) DTI's ability to market
its services in a competitive industry; (9) DTI's ability to
execute, integrate and realize the benefits of acquisitions, and
manage the resulting growth of its business; (6) potential
liability for claims arising from damage or harm caused by the
operation of DTI's tools, or otherwise arising from the dangerous
activities that are inherent in the oil and gas industry; (7) DTI's
ability to obtain additional capital; (8) potential political,
regulatory, economic and social disruptions in the countries in
which DTI conducts business, including changes in tax laws or tax
rates; (9) DTI's dependence on its information technology systems,
in particular Customer Order Management Portal and Support System,
for the efficient operation of DTI's business; (10) DTI's ability
to comply with applicable laws, regulations and rules, including
those related to the environment, greenhouse gases and climate
change; (11) DTI's ability to maintain an effective system of
disclosure controls and internal control over financial reporting;
(12) the potential for volatility in the market price of DTI's
common stock; (13) the impact of increased legal, accounting,
administrative and other costs incurred as a public company,
including the impact of possible shareholder litigation; (14) the
potential for issuance of additional shares of DTI's common stock
or other equity securities; (15) DTI's ability to maintain the
listing of its common stock on Nasdaq; (16) the conditions to the
completion of the proposed transaction, including obtaining SDP
shareholder approval and the regulatory approvals required for the
transaction on the anticipated schedule or at all, (17) financing
for the transaction may not be obtained by DTI on favorable terms
or at all, (18) the closing of the proposed transaction may not
occur or could be delayed, either as a result of litigation related
to the transaction or otherwise or result in significant costs of
defense, indemnification, and liability, (19) the risk that the
cost savings and any other synergies from the SDP transaction may
not be fully realized by DTI or may take longer or cost more to be
realized than expected, including that the SDP transaction may not
be accretive to DTI within the expected timeframe or the extent
anticipated, (20) completing the SDP transaction may distract DTI
and SPDI management from other important matters, (21) the
possibility that any or all of the various conditions to the
consummation of the proposed transaction may not be satisfied or
waived, including the failure to receive any required regulatory
approvals from any applicable governmental entities (or any
conditions, limitations or restrictions placed on such approvals),
(22) the possibility that competing offers or acquisition
proposals for SDP will be made, (23) the occurrence of any
event, change or other circumstance that could give rise to the
termination of the definitive transaction agreement relating to the
proposed transaction, including in circumstances, which would
require a party to pay a termination fee, (24) the effect of
the announcement or pendency of the proposed transaction on SDP's
ability to attract, motivate or retain key executives and
employees, its ability to maintain relationships with its
customers, suppliers and other business counterparties, or its
operating results and business generally, (25) risks related
to the proposed transaction diverting management's attention from
SDP's or DTI's ongoing business operations, (26) the amount of
costs, fees and expenses related to the proposed transaction,
(26) the risk that SDP's or DTI's stock price may decline
significantly if the proposed transaction is not consummated,
(27) the risk of shareholder litigation in connection with the
proposed transaction, including resulting expense or delay, and
(28) other risks and uncertainties separately provided to you and
indicated from time to time described in filings and potential
filings by DTI and SDP with the Securities and Exchange Commission
(the "SEC"). You should carefully consider the risks and
uncertainties described in the information presented in DTI's
current report on Form 8-K filed June 27,
2023 and the Quarterly Report on Form 10-Q for the quarter
ended September 30, 2023 filed
November 14, 2023 and SDP's Annual
Report on Form 10-K for the year ended December 31 2022 filed March 16, 2023, SDP's Quarterly Report on Form
10-Q for the quarter ended September 30,
2023 and filed November 14,
2023. Such forward-looking statements are based on the
beliefs of management of DTI and SPD, respectively, as well as
assumptions made by, and information currently available to DTI's
and SPD's management, respectively. Actual results could differ
materially from those contemplated by the forward-looking
statements as a result of certain factors detailed above and in the
joint prospectus/proxy statement and other filings by DTI or SPD
with the SEC. All subsequent written or oral forward-looking
statements attributable to DTI, SPD or persons acting on their
respective behalf are qualified in their entirety by this
paragraph. Forward-looking statements are subject to numerous
conditions, many of which are beyond the control of each of DTI and
SPD, including those set forth or to be set forth in the Risk
Factors section of the joint prospectus/proxy statement, and
described in the other filings by DTI and SPD with the SEC. Neither
DTI nor SDP undertake any obligation to update these statements for
revisions or changes after the date of this release, except as
required by law.
Contacts:
DTI Investor Relations
Ken Dennard / Rick Black
InvestorRelations@drillingtools.com
SDP Investor Relations
Deborah K. Pawlowski / Craig P. Mychajluk
Kei Advisors LLC
716-843-3908 / 716-843-3832
dpawlowski@keiadvisors.com / cmychajluk@keiadvisors.com
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SOURCE Drilling Tools International Corp.