Precision Drilling offers $1.6B US for Grey Wolf

Precision Drilling Trust made an unsolicited $9 US a share bid for Grey Wolf Inc. on Tuesday, presenting its Houston-based target with an alternative to its planned merger with Basic Energy Services.

The offer, valued at about $1.6 billion US, led to heavy trading in Grey Wolf stock, which roses 74 cents to $9.02 US on the New York Stock Exchange.

In a letter to Thomas Richards, chairman and CEO of Grey Wolf, Precision said its bid was better than the Basic deal.

"Our combined companies would have much greater scale and a stronger financial position allowing us to substantially advance our mutual business objectives in the contract drilling business."

Grey Wolf, an oil and gas drilling company that operates in the U.S. and Mexico, announced a "merger of equals" with Basic on April 21.

Precision said it would offer cash for a third of the takeover, and units for the rest.

Precision units fell $1.12 to $27.03 in TSX trading.

The trust said its offer is a 21 per cent premium to the average closing price of Grey Wolf stock over the thirty days before the offer.

Grey Wolf said it would consider the offer.

Grey Wolf reported a profit of $169.9 million US on revenue of $906.6 million for the year ended Dec. 31, 2007.