National Oilwell to Buy Robbins & Myers for $2.5 Billion

National Oilwell Varco Inc. (NOV), the largest U.S. maker of oilfield equipment, agreed to buy Robbins & Myers Inc. (RBN) for $2.54 billion in cash, its biggest acquisition in more than four years.

Holders of Robbins & Myers will get $60 a share under the agreement, Houston-based National Oilwell said in a statement today. That’s a 28 percent premium to Robbins & Myers’s closing price yesterday. The shares rose a record 27 percent to $59.63 at the close in New York.

The acquisition will consolidate National Oilwell’s position as a supplier of blowout preventers, which can shut off wells in an emergency, said Brian Uhlmer, an analyst at Global Hunter Securities LLC in Houston. Robbins & Myers, based in Dayton, Ohio, is the fourth-largest maker of blowout preventers for drilling rigs on land, he estimated. National Oilwell is the second.

The purchase is a departure for National Oilwell, which “usually likes fixer-uppers,” Uhlmer, who rates both companies a buy and doesn’t own the shares, said in a phone interview today. Robbins & Myers “is pretty well fixed up. Not a lot to improve and squeeze out.”

The purchase is the largest by National Oilwell since it agreed to buy Grant Prideco Inc. for about $7.4 billion in 2007. Before today, the company had spent $2.01 billion on nine acquisitions this year, according to an Aug. 6 regulatory report. The company is still hunting for more deals, Clay Williams, chief financial officer at National Oilwell, said today in a telephone interview.

‘Capital Available’

“We want to continue to work on opportunities,” Williams said. He didn’t specify the size of deals still being considered. “We have a lot of capital available to us. We’re going to continue to look selectively for opportunities on a number of strategic fronts.”

About 63 percent of Robbins & Myers’s sales in fiscal 2011 were to the oil and gas industry, according to a July 9 investor presentation. Chemical and pharmaceutical equipment sales made up most of the remainder.

Beyond its blowout preventers, National Oilwell was also interested in acquiring Robbins & Myers for its line of so- called artificial-lift pumps, Williams said. The pumps boost oil and natural gas to the surface months after a well is drilled.

Robbins & Myers is expected add to National Oilwell’s profits next year, Williams said, declining to estimate the increase.

‘Sweet Spot’

“We feel that our combined manufacturing infrastructure and portfolios of technology will further advance our presence in the oil and gas markets we serve,” Pete Miller, chairman and chief executive officer of National Oilwell, said in the statement. National Oilwell’s shares rose 0.8 percent to $76.98.

National Oilwell said on July 26 it expects to continue to buy companies in what Williams said was a “sweet spot” for mergers and acquisitions.

“Sellers have the right mix of prosperity and fear, and we have a high level of conviction in our outlook for oilfield markets,” Williams told analysts and investors during a July conference call.

The deal is expected to add 25 to 35 cents a share to National Oilwell’s profit next year, Tom Curran, a New York- based analyst for Wells Fargo & Co., wrote today in a note to investors.

Both boards have approved the transaction, which the companies expect to close in the fourth quarter. Citigroup Inc. provided financial advice to Robbins & Myers, while Thompson Hine LLP acted as legal counsel. National Oilwell’s legal adviser is Fulbright & Jaworski LLP.

To contact the reporter on this story: David Wethe in Houston at dwethe@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net