Friendly Takeover Info > Reasons to Reject Total’s Inferior Unsolicited Bid

Reasons to Reject Total’s Inferior Unsolicited Bid


After careful consideration of the Total Offer and the Arrangement, the Savanna Board, on the recommendation of the Special Committee, unanimously recommends that Shareholders reject the Total Offer.

The Savanna Board UNANIMOUSLY recommends that Shareholders REJECT the Total Offer and NOT TENDER their Common Shares. Any Shareholder who has tendered his or her Common Shares under the Total Offer should WITHDRAW those Common Shares. 



On March 8, 2017, Savanna and Western entered into an arrangement agreement (the “Arrangement Agreement“) providing for the Arrangement.  In reaching its determination and recommendation, the Special Committee and the Savanna Board, with the assistance of its financial and legal advisors, carefully reviewed the material terms of the Arrangement Agreement and the Total Offer and relied on a number of substantive factors including, among others:

  • The premium offered pursuant to the Arrangement is superior to the Total Offer.  o The consideration offered to Shareholders pursuant to the Arrangement was equivalent to a 30.1% premium to Savanna’s closing price on February 17, 2017, the date that the non-binding letter of intent with Western was executed.
  • The exchange ratio implies a premium of approximately 14.5 % based on the 10 day volume weighted average price of Savanna and Western as at March 8, 2017.
  • The Arrangement provides Shareholders with the opportunity to own a material stake in a stronger drilling and well servicing company. The combined company is expected to have:
    •  the second largest contract drilling and second largest well servicing fleet in Canada
    • a broader, more diverse, domestic and international drilling platform from which to grow operations to meet customer demand
    • an expanded customer base with greater geographic relevance within key operating areas throughout North America and a leading position in the Australian onshore drilling and well servicing market
    •  increased ability to strategically move equipment to meet customer demand and capture growth opportunities
    •  a stronger organization after integrating talent at the board, senior management and employee levels of Savanna and Western
    •  significant operational synergies and efficiencies through combining operational facilities and reduced corporate and professional fees and
    •  potentially enhanced shareholder liquidity, with reduced cost of capital and future access to capital to fund future growth and acquisition opportunities
  • The Arrangement provides Shareholders with enhanced exposure to a recovery in industry activity levels.
  • The combined entity would have generated $335 million of EBITDAS on a combined basis in 2014, calculated as the sum of Western and Savanna EBITDAS in 2014 of $177 million and $158 million, respectively.
  •  Under the Total Offer, the combined entity would have generated $260 million of EBITDAS on a combined basis in 2014, calculated as the sum of Total and Savanna EBITDAS in 2014 of $102 million and $158 million, respectively.
  • Western is highly experienced in operating a large scale contract drilling and well servicing company.
  • The Western management team has a proven track record of operating a large scale contract drilling and well servicing organization and has established strong relationships with a number of the top tier customers.
  •  Both Savanna and Western have existing operations in the contract drilling, well servicing and surface rentals business which will be conducive to a highly efficient integration process for the businesses.
  •  Peters & Co. and Cormark have provided fairness opinions in respect of the Arrangement.
  • The Special Committee received opinions from each of Peters & Co. and Cormark that the consideration to be received by the Shareholders pursuant to the Arrangement is fair, from a financial point of view, to Shareholders.
  •  There is less risk to completing the Arrangement as compared to the Total Offer.
  •  The Total Offer is highly conditional and there is no certainty that the conditions to the Total Offer will be satisfied or waived by Total.
  • In the Total Notice of Variation, Total states it may require financing to enable it to fund the repayment of amounts outstanding under the Second Lien Facility and the repurchase of Senior Notes. Total also states that while it currently expects to have access to sufficient financing on acceptable terms, there can be no assurance that additional financing, including to repay amounts outstanding under the Second Lien Facility, if required, and the repurchase of Senior Notes, will be available to Total.
  • The Arrangement is subject to a limited number of conditions, including approval by the shareholders of each of Savanna and Western at annual and special meetings expected to be held in mid-May 2017. The Arrangement is not subject to consent of any of Savanna’s lenders. A copy of the Arrangement Agreement is available under Savanna’s profile on SEDAR at Savanna will send a detailed management proxy circular to Shareholders in April 2017 in connection with its annual and special meeting.
  •  Western participated in the previously announced strategic alternatives process under a confidentiality agreement pursuant to which Western received confidential information and completed due diligence on Savanna.
  •  Savanna entered into exclusive negotiations with Western on February 17, 2017 from which time Savanna has received confidential information, under a confidentiality agreement, and has completed necessary due diligence on Western.
  • The Arrangement will be Court approved.
  •  The Arrangement is subject to a determination of the Court of Queen’s Bench of Alberta that the Arrangement is fair and reasonable to Shareholders. In addition, Shareholders will have the opportunity to vote on the Arrangement, which requires the approval of at least 66⅔% of the votes cast by Shareholders and, pursuant to MI 61-101, a majority of votes cast by minority Shareholders.
  •  Shareholders will be granted dissent rights.
  •  Shareholders that oppose the Arrangement may, subject to compliance with certain terms and conditions, dissent with respect to the Arrangement and be entitled to be paid fair value for their Savanna Shares in accordance with section 191 of the Business Corporations Act (Alberta), which will be granted pursuant to and varied by an order of the Court of Queen’s Bench of Alberta in connection with the Arrangement and the Arrangement.
  • The Savanna Board has preserved the ability to respond to unsolicited superior proposals.
  • Pursuant to, and subject to the terms and conditions of, the Arrangement Agreement, the Savanna Board maintains the ability to consider and respond, in accordance with its fiduciary duties, to unsolicited bona fide written acquisition proposals that would, if consummated in accordance with its terms, result in a transaction which is more favourable, from a financial point of view, to the Shareholders than the Arrangement.
  •  The Arrangement is supported by all of Savanna’s directors and officers and by other Shareholders.
  •  All of the directors and officers of Savanna and certain other Shareholders have entered into voting support agreements with Western pursuant to which such Shareholders have agreed, subject to the terms and conditions contained therein, to vote in favour of the Arrangement.

The foregoing summary of the information and factors considered by the Special Committee and Savanna Board in reaching its conclusion and recommendation is not intended to be exhaustive. The members of the Special Committee and the Savanna Board evaluated the various factors summarized above in light of their own knowledge of the business, financial condition and prospects of Savanna, and based upon the advice of the Special Committee’s and Savanna Board’s financial and legal advisors. In view of the numerous factors considered in connection with the evaluation of the Total Offer and the Arrangement, the Special Committee and Savanna Board did not find it practicable to, and did not, quantify or otherwise attempt to assign relative weight to specific factors in reaching its conclusion and recommendation. In addition, individual members of the Special Committee and Savanna Board may have given different weight to different factors. The conclusion and unanimous recommendation of the Special Committee and Savanna Board was made after considering all of the information and factors involved.

Shareholder Disclaimer

Savanna Energy Services Corp. ("Savanna" or "the Company") is a public company trading on the Toronto Stock Exchange under the symbol SVY. Savanna's expectations and predictions for the future are discussed in our press releases, presentations, quarterly and annual reports. Such statements, including statements in this document and the documents listed above that relate to matters that are not historical are forward-looking statements within the relevant securities regulations in Canada and elsewhere. Certain forward-looking statements may constitute projections regarding future events or the future financial performance of Savanna Energy Services Corp. When used in this website, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "seek", "propose", "estimate", "expect" and similar expressions, as they relate to Savanna Energy Services Corp., are intended to identify forward-looking statements. Such statements reflect Savanna Energy Services Corp.'s views at the time such statements are made with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause Savanna Energy Services Corp.'s actual results, performance or achievements to vary from those expressed or implied in such forward-looking statements or could affect the extent to which a particular projection is realized.

It is important to take the following factors into consideration when evaluating Savanna Energy Services Corp.

  • The rise and fall in worldwide prices and demand for oil and gas.
  • Changes in the demand for our services, competitors' existence, technological changes and developments in the oilfield services industry.
  • Changes in levels of natural gas and crude oil exploration and development activities.
  • The continuation of operating risks inherent in the oil field services industry.
  • The continuation of regulatory and legislative uncertainties.
  • The change in tax laws.
  • Political instability, war or acts of terrorism in any of the countries in which we do business.
  • General economic conditions.

Savanna's business depends significantly on the level of spending by oil and gas companies for exploration, development and production activities. Sustained increases or decreases in the price of natural gas or oil could materially impact such activities, and thereby materially affect our financial position, results of operations and cash flows.

The above disclaimer outlines the risks and factors which are important to consider.

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