Is That Your Final Offer?

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Editor's Note: A previous version of this article incorrectly reported that Precision Drilling was weeks away from a completed merger with Basic Energy, when we in fact meant to identify Grey Wolf as Basic Energy’s partner. We regret the error.

As noted in round two of Precision Drilling Trust's (NYSE: PDS) attempted takeover of fellow land driller Grey Wolf (AMEX: GW), the clock is ticking for this coalition of the drilling. There are less than three weeks to go until Grey Wolf is due to tie the knot with Basic Energy Services (NYSE: BAS).

That sense of urgency has led Precision to make a third offer for the Houston rig wrangler. From the first offer to the one now on the table, the bid price has risen 11% -- comparable to the higher amount recently offered by Allis-Chalmers Energy (NYSE: ALY) for Bronco Drilling (Nasdaq: BRNC). The cash portion of the offer is now a maximum of 50%, versus one-third originally. That means Grey Wolf shareholders could now elect to receive up to $5 in cash along with $5 worth of Precision for every Grey Wolf share owned. This fresh bid is also a higher incremental hike than the second bid -- a respectable 7.5% boost.

In a serendipitous slip of the fingers, Reuters reported that Precision's maximum cash offer represented "an increase from 40 percent in its pervious offer [sic]."

As you surely know, spellcheckers tend to break down when you misspell a word in a way that forms another valid word. You may not know that pervious means "Open to arguments, ideas, or change." That describes the second offer perfectly!

Precision's taking pains to point out that the third offer is something else entirely -- an impervious bid. The company states in today's press release that "Our proposal is fully priced and we will not make any further revisions."

I've heard that kind of talk before. Granted, Precision did make an effort to distance itself from the buy-at-any-cost disposition of a certain 2007-vintage Canadian gold miner by stating that it's "only prepared to proceed with a merger in circumstances where the consideration offered to the shareholders of Grey Wolf is also equitable to the unitholders of Precision."

So is this really the end of the bumpy buyout road, or just another pervious offer by Precision? We'll soon find out.

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