National Oilwell Varco to pursue spinoff of distribution business
BY NATHALIE TADENA
HOUSTON -- National Oilwell Varco will explore a plan to spin off its distribution segment, a move the oilfield-service equipment manufacturer said would create two separate, publicly traded companies that are better positioned to focus on their specific products and services.
Shares jumped 4.3% to $81.87 in premarket trading. Through Monday's close, the stock is up 17% over the past three months.
Chairman and Chief Executive Pete Miller said the company's distribution business has the market size and scale to operate as a standalone company, following last year's acquisitions of Wilson Supply and C.E. Franklin.
As a separate company, the distribution business would have more than 415 locations and operations in 26 countries, representing about 85% of the revenue of National Oilwell Varco's distribution and transmission segment for the six months ended June 30. That segment posted revenue of $2.52 billion, while total company revenue came in at $10.91 billion.
The distribution company would provide maintenance, repair and operating supplies to the global energy and industrial markets. Miller said the distribution company would also be poised for continued profit growth.
The spinoff is expected to be completed in the first half of 2014, subject to regulatory and final board approval. The separation doesn't require shareholder approval.
NOV has recently seen its bottom line pressured by what it has called a softer-than-expected North American market. In July, the company reported its second-quarter earnings sank 12% as margins were pressured despite a double-digit percentage rise in revenue.
Dow Jones Newswires