Merger Monday

17 December 2007 By Rob Cox Follow @rob1cox

Ingersoll s paying $10.1bn for Trane and Grant Prideco s going for $7.4bn to National Oilwell. After a dearth of activity, this warms investment bankers hearts. But shareholders have nothing to be thankful for: both deals destroy value.

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Oilfield equipment maker National Oilwell Varco acquired rival Grant Prideco for about $7.4bn in cash and stock; representing a 22% premium. NOV management said the deal would be immediately accretive to shareholders and projects to save $40m in annual costs from combining the two companies' operations. NOV's shares fell as much as 10% after the start of trading on Monday.
Ingersoll Rand agreed to acquire airconditioner maker Trane for about $10.1bn in cash and stock. The price represents a 29% premium to Trane's closing share price last Friday. Trane shareholders will receive $36.50 per share in cash and 0.23 shares of Ingersoll Rand stock for each Trane share. Ingersoll Rand will also assume about $150m of Trane debt. IngersollRand anticipates cost and revenue synergies to exceed $300m a year by 2010. Shares in Ingersoll Rand fell as much as 10% after the announcement.

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