National-Oilwell Varco, Inc. (NYSE:NOV) announced its proposed acquisition of Robbins & Myers, Inc. (NYSE:RBN) for about $2.5 billion in cash. According to the agreement, shareholders of Robbins & Myers, Inc. (NYSE:RBN) will receive $60 per share, which is a substantial premium, about 28 percent, on its closing price Wednesday.
National oilwell varco

National Oilwell Varco, is a global leader in equipment and components used in oil and gas drilling and production operations and the provision of oilfield services. Robbins & Myers, Inc. (NYSE:RBN) is a manufacturer of equipment of global energy, chemical and other industrial markets. The company also provides products and services for upstream oil and gas markets, including industrial process and flow control products.

The agreement marks yet another M&A transaction in the energy sector, which has seen a slew of deals in the recent past. Oil majors are making a beeline for acquiring properties across the U.S., which could yield rich exploratory dividends in terms of gas and oil finds. The emphasis on exploration, particularly those of shale rock, has resulted in a perception that companies that service the sector, such as National-Oilwell Varco, Inc. (NYSE:NOV) and R&M, could be beneficiaries of the demand for their equipment and services. Read about Chesapeake’s Energy Corporation (NYSE:CHK) massive bet on shale in eastern Ohio here on ValueWalk.

National Oilwell’s second-quarter earnings were up 26 percent and revenues beat estimates. Revenues and margins also improved at R&M, though earnings declined due the heavy contribution from the Romaco operations, since discontinued.

In the company press release, Mr. Pete Miller, Chairman, President, and CEO of National Oilwell Varco, remarked, “Robbins & Myers has many complementary products, with those National Oilwell Varco currently offers the industry.  I am particularly enthusiastic about the prospect of incorporating their downhole tools, pumps, and valves into National Oilwell Varco Petroleum Services & Supplies and Distribution & Transmission segments.  We feel that our combined manufacturing infrastructure and portfolios of technology will further advance our presence in the oil and gas markets we serve.  We are extremely excited about this combination and look forward to welcoming a very talented group of employees into the National Oilwell Varco family.”

The deal is expected to close around the fourth quarter, 2012.

It may be noted that the largest shareholder of R&M is M.H.M. & Co, whose owners are in the majority descended from late Ohio banker, Maynard H Murch. Significantly, Loftis Investment LLC, a general partner in M.H.M, is owned by National Oilwell Chairman, Thomas P. Loftis, according to Reuters. M.H.M owns 5.2 million shares in Robbins & Myers, Inc. (NYSE:RBN), about 12 percent of the company, and has agreed to lend its voting support in favor of the deal.

It appears, however, that the deal is being investigated by former United States Securities and Exchange Commission attorney, Willie Briscoe, and the securities litigation firm of Powers Taylor, LLP, for shareholders, on the grounds that the offer price is far below the true worth of a share in R&M, estimated by one analyst to be $72 per share.

Similarly, R&M’s board is being investigated for a possible breach of fiduciary duties and other violations of law relating to this acquisition by Rigrodsky & Long, P.A., a firm that regularly prosecutes shareholder litigations, securities class actions, and corporate governance litigations.