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C&J Merger With Nabors Arm Delayed by Court

The $2.89 billion merger of C&J Energy Services Inc. and the completions arm of Nabors Industries Ltd. has been halted temporarily so that C&J may shop for other bids, a Delaware Chancery Court ruled Monday.

Houston-based C&J agreed in June to merge with Nabors' completions arm in a stock transaction to create one of the largest hydraulic fracturing fleets in North America (see Shale Daily, June 26).

Nabors' completion and production business is the sixth largest in the United States, while C&J owns the 13th largest fleet of trucks used in stimulation operations.

However, Chancery Court Judge John Noble ruled that C&J should have taken bids before agreeing to the merger, siding with some C&J shareholders [City of Miami General Employees & Sanitation Employees Retirement Trust v. C&J Energy Services, CA No. 9980]. The lawsuit claims that the stock-for-stock merger would end up with C&J shareholders "holding a minority interest in a controlled company if the proposed acquisition is consummated."

The ruling requires C&J to solicit competing proposals from other potential buyers for 30 days before it may close the proposed transaction with Nabors.

C&J officials said they would appeal the decision to the Delaware Supreme Court. “The manner in which the company will be required to solicit competing proposals has not yet been established by the court,” the company said.

"While we respect the court's process, we disagree with [Noble's] findings and decision” that C&J was obligated to solicit proposals before executing the merger agreement, said CEO Josh Comstock. "We remain committed to this transaction and focused on closing as soon as possible."

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