Wilson, headquartered in Houston, is a leading distributor of PVF and mill, safety and other maintenance products to energy and industrial markets in the United States. Wilson generated sales of $730.4 million in 2003. If combined, sales of CE Franklin and Wilson would approach $1 billion.
CE Franklin and Wilson have been successful in joint marketing initiatives in the past, most recently winning a major North America maintenance, repair and operating supply agreement with a North American exploration and production company that is expected to generate annual revenue of $20 million in Canada, and $15 million in the United States. “The combination of CE Franklin and Wilson create a company that will be well-positioned to pursue significant North America-wide and international supply arrangements going forward,” said Michael West, president and CEO of CE Franklin, who will manage the combined entity.
A special committee of the independent members of the Board of Directors of CE Franklin has been formed to consider and make a recommendation to the Board of the transaction. The transaction is a related party transaction under Canadian securities law by virtue of Smith's current 55% shareholdings in CE Franklin. The special committee has retained CIBC World Markets as its financial advisor.
It is anticipated that Smith would own about 90% of the common shares of CE Franklin as a result of the transaction. Smith has advised CE Franklin that its intent is to reduce its ownership interest to the 55% level held today, the timing of which will be dependent on the market conditions and other factors.
The transaction is subject to negotiation of a definitive agreement, applicable regulatory approvals and to the approval of a majority of CE Franklin shareholders (excluding Smith) at a meeting to be held in September 2004.
CE Franklin distributes PVF and related products to the Canadian oil and gas industry. It has 37 branches across Canada.