NOV Takes Over Robbins & Myers - Analyst Blog

Oilfield services behemoth National Oilwell Varco Inc. (NOV) has closed its previously announced acquisition of smaller rival Robbins & Myers Inc. for about $2.5 billion in cash. The transaction, which was declared in August, 2012, was completed following the receipt of requisite antitrust clearance. As per the deal, Robbins & Myers’ shareholders would get $60 in cash for each share they hold.

Robbins & Myers specializes in the manufacture of critical well drilling equipment parts – including valve controls and grinders – to manage the flow of oil and gas in drilling operations.

The acquisition – National Oilwell Varco’s largest in more than four years – will allow the energy equipment contractor to broaden scale and scope of the solutions that it offers to oil and gas customers worldwide. Post merger, National Oilwell Varco expects Robbins & Myers’ complementary products to benefit its product line of well tools, pumps and valves.

In particular, the move will help National Oilwell Varco to strengthen its position as a supplier of blowout preventer (a critical safety machine that can shut a well off in case of an emergency), as Robbins & Myers is the fourth largest maker of such devices.

Zacks Rank

National Oilwell Varco, which ranks ahead of Cameron International Corp. (CAM) as the biggest U.S. maker of oilfield equipment, currently retains a Zacks Rank #4 (Sell), implying that it is expected underperform the broader U.S. equity market over the next one to three months.

Stocks to Consider

While we expect National Oilwell Varco to perform below its peers and industry levels in the coming months and see little reason for investors to own the stock, one can look at McDermott International Inc. (MDR) and Patterson-UTI Energy Inc. (PTEN) as good buying opportunities. These energy equipment suppliers – sporting a Zacks Rank #2 (Buy) – have solid secular growth stories with potential to rise from current levels.

CAMERON INTL (CAM): Free Stock Analysis Report

MCDERMOTT INTL (MDR): Free Stock Analysis Report

NATL OILWELL VR (NOV): Free Stock Analysis Report

PATTERSON-UTI (PTEN): Free Stock Analysis Report

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