Halliburton Acquires Boots & Coots

Halliburton Company (HAL), the second largest oilfield services company in the world, agreed on Friday to buy Boots & Coots (WEL – $2.35), a well known provider of integrated pressure control services to oil and gas exploration companies, in a stock and cash transaction worth approximately $240 million.

Boots & Coots stockholders will receive $3.00 per share for each share of Boots & Coots common stock they hold, comprised of $1.73 in cash and $1.27 in Halliburton common stock. The Boards of Directors of both Halliburton and Boots & Coots have approved the transaction, which is expected to close in the summer of 2010.

Following completion of the transaction, a new product service line within Halliburton will be created to include Halliburton’s existing coiled tubing and hydraulic workover operations and Boots & Coots’ intervention services and pressure control business. Boots & Coots’ management will be retained to lead Halliburton’s Boots & Coots product service line with operating results reported through Halliburton’s Completion and Production reporting segment.

We recommended Boots & Coots (back then called Boots & Coots International Well Control Inc.) early 2009 at $1.14. We liked the stock because it was trading at a P/E of 3.93; the Company’s third quarter and nine months results, ending September 30, 2008, were excellent; and we believed that both the economy and oil prices would recover.

Early March, 2010 we decided to get some money off the table and sell half our position at $2.00. If the stock were to open around $3 on Monday, we’re looking at a total profit of at least 115% in 15 months time.

We expect the shares to open at around $3 on Monday, but we don’t intend to sell them just yet. As Boots & Coots is quite a unique Company, there may be other interested parties that are willing to pay a higher price. And because the deal is only expected to close in the summer of 2010, we have plenty of time left to sell if no one increases the bid.

How do you feel about the $3 offer? Do you think another Company will increase the bid? Are you going to sell your shares Monday morning?
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