National-Oilwell, Varco merge

National-Oilwell Inc. and Varco International Inc. have signed a definitive merger agreement. Each company's board of directors unanimously approved the merger.

National-Oilwell Inc. and Varco International Inc. have signed a definitive merger agreement. Each company's board of directors unanimously approved the merger.

The agreement calls for Varco stockholders to receive 0.8363 shares of National Oilwell common stock for each Varco common share, resulting in the combined company having 170 million shares outstanding on a fully diluted basis. Based on National Oilwell's closing price yesterday, the transaction is valued at $25.80 per Varco common share, and the combined company would have a market capitalization in excess of $5 billion. On a fully-diluted basis, the current stockholders of National Oilwell will own 51% of the combined company and the current stockholders of Varco will own 49%.

National Oilwell will change its corporate name to National Oilwell Varco Inc. The transaction is expected to be tax free to Varco stockholders, and is expected to be accretive to earnings and cash flow per share for stockholders of both companies in 2005.

Pete Miller, chairman, president, and CEO of National Oilwell, will serve as president and CEO of the combined company. John Lauletta, chairman and CEO of Varco, will serve as chairman of the board of the combined company, which will consist of equal representation from each company. Joe Winkler, President and COO of Varco, will serve as the combined company's COO.

"The combination of National Oilwell and Varco brings together some of the most respected product and service lines in the industry," Miller says.

The transaction is subject to various conditions including stockholder approval of both companies and customary regulatory approvals, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

08/12/04

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