Precision Drilling: The Grey Wolf Saga Continues (PDS, GW)

The merger between Precision Drilling (NYSE:PDS) and Grey Wolf (NYSE:GW) could turn into the longest running soap opera on Wall Street. Our story last month summed up the action so far.  Last night, Precision announced that the shareholders’ meeting was beingmoved to December 23rd, and that the merger terms were being amended.So far, only 54% of Grey Wolf shares have approved the deal, and theshareholder meeting was scheduled for December 9th.

The change to the merger agreement alters terms relating to the cashpaid to Grey Wolf convertible note holders who do not convert theirnotes to Grey Wolf stock before the merger. Precision will keep thecash to buy the convertible notes after the merger is completed. Thischange is not likely to influence many votes one way or the other.

Precision’s common units closed at $8.26/unit yesterday, making theoffer for Grey Wolf worth about $6.55/share, about a third less thanthe offer was worth when it was first made. The longer this soap operacontinues, the less the deal is worth to Grey Wolf shareholders.

Paul Ausick
December 3, 2008