FILED BY NATIONAL-OILWELL, INC. PURSUANT TO
RULE 425 UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND
DEEMED FILED PURSUANT TO RULE 14A-12 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
SUBJECT COMPANY: VARCO INTERNATIONAL, INC.
COMMISSION FILE NO. 001-08158
ON AUGUST 12, 2004, NATIONAL-OILWELL, INC. AND VARCO INTERNATIONAL,
INC. ISSUED THE FOLLOWING JOINT PRESS RELEASE:
(NATIONAL OILWELL LOGO) (VARCO LOGO)
NEWS CONTACTS: STEVE KRABLIN
NATIONAL-OILWELL, INC.
(713) 346-7773
CLAY WILLIAMS
VARCO INTERNATIONAL, INC.
(281) 953-2200
FOR IMMEDIATE RELEASE
NATIONAL OILWELL AND VARCO ANNOUNCE SIGNING OF
DEFINITIVE MERGER AGREEMENT
HOUSTON, TX, August 12, 2004--National-Oilwell, Inc. (NYSE: NOI) and Varco
International Inc. (NYSE:VRC) jointly announced today the signing of a
definitive merger agreement.
The merger agreement, unanimously approved by each company's board of directors,
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
approximately 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 approximately 51% of the combined
company and the current stockholders of Varco will own approximately 49%. Upon
the closing of the transaction, 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 Chief Executive Officer 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 Chief Operating Officer of Varco, will serve as the
combined company's Chief Operating Officer.
"The combination of National Oilwell and Varco brings together some of the most
respected product and service lines in the industry," stated Pete Miller. "It
affords excellent opportunities for the stockholders, employees and customers of
both companies, as National Oilwell Varco will be better positioned to compete
effectively in the global market place. Customers will benefit from our ability
to respond with an unparalleled level of quality in capital equipment,
expendable products and services."
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John Lauletta commented, "Both Varco and National Oilwell employees are known
for their product innovation and dedication to customer service. We intend to
fully leverage these shared values and common culture by focusing our combined
efforts on research and development for the next generation of energy products
as we anticipate the ever-growing worldwide demand for energy over the next few
years."
Pete Miller added, "We expect approximately $40-50 million in annualized pre-tax
cost savings and operating synergies to arise from overlapping production
facility closures, IT infrastructure rationalization, sales and marketing
expense reduction, and corporate overhead eliminations that should be achieved
by the end of 2005."
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. It is anticipated that stockholders'
meetings and the closing of the transaction would occur within four to six
months. National Oilwell and Varco intend to file a joint proxy statement with
the Securities and Exchange Commission shortly. Goldman, Sachs & Co. acted as
financial advisor to National Oilwell and Citigroup Global Markets Inc. acted as
financial advisor to Varco.
CONFERENCE CALL
A joint conference call to discuss the transaction will be held this morning at
10:00 a.m. Central Time. The call will be broadcast through the Investor
Relations link on both National Oilwell's and Varco's web sites at
www.natoil.com and www.varco.com, and a replay will be available on these sites
for thirty days following the conference. Participants may also join the
conference call by dialing 303-205-0033 five to ten minutes prior to the
scheduled start time.
ABOUT NATIONAL OILWELL
National Oilwell is a worldwide leader in the design, manufacture and sale of
comprehensive systems and components used in oil and gas drilling and
production, as well as in providing supply chain integration services to the
upstream oil and gas industry.
ABOUT VARCO
Varco International, Inc. is a leading provider of services, products, and
highly-engineered equipment to the world's oil and gas industry. With operations
in over 350 locations in over 40 countries across six continents, Varco provides
oilfield tubular inspections and internal tubular coating services; drill
cuttings separation, waste management and disposal services; rig instrumentation
and communication services; in-service pipeline inspection services; and sucker
rod inspection and reclamation services. Additionally, the Company manufactures
and supplies innovative drilling systems and technology; coiled tubing and
pressure control equipment; high-pressure fiberglass and composite tubing; and
in-line inspection equipment for the makers of oilfield tubing.
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Statements made in this press release that are forward-looking in nature are
intended to be "forward-looking statements" within the meaning of Section 21E of
the Securities Exchange Act of 1934 and may involve risks and uncertainties.
These statements include, without limitation, statements regarding the
consummation of the transaction, its effects on future earnings or other
operating results, the expected closing date of the transaction, any other
effect or benefit of the transaction, and any other statements that are not
historical facts. These risks and uncertainties include the ability of National
Oilwell and Varco to achieve their forecasted operating results and the cost
savings and operating benefits currently expected from the proposed transaction
and the timing and receipt of approvals for the merger. Other risks and
uncertainties, which are more fully described in documents filed by National
Oilwell and by Varco with the Securities and Exchange Commission, including
Annual Reports on Form 10-K, could cause actual results to differ from those
contained in the forward-looking statements.
ADDITIONAL INFORMATION
In connection with the proposed merger, National-Oilwell, Inc. and Varco
International Inc. will file a joint proxy statement/prospectus with the
Securities and Exchange Commission. National-Oilwell, Inc. and Varco
International Inc. and their respective directors and officers may be deemed to
be participants in the solicitation of proxies from their respective
stockholders. Information about these persons can be found in National Oilwell's
and Varco's respective Annual Reports on Form 10-K filed with the SEC and
additional information about such persons may be obtained from the proxy
statement/prospectus when it becomes available. INVESTORS AND SECURITY HOLDERS
ARE URGED TO CAREFULLY READ THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE
PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of
the joint proxy statement/prospectus when it is available and other documents
containing information about National-Oilwell, Inc. and Varco International
Inc., without charge, at the SEC's web site at WWW.SEC.GOV, National Oilwell's
web site at WWW.NATOIL.COM, and Varco's web site at WWW.VARCO.COM. Copies of the
joint proxy statement/prospectus and the SEC filings that will be incorporated
by reference therein may also be obtained for free by directing a request to
either Investor Relations, National-Oilwell, Inc., 713-346-7500 or to Investor
Relations, Varco International, Inc., 281-953-2200.
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