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Third Avenue to vote against merger of Bronco Drilling, Allis-Chalmers
By Lisa Kerner
Charlotte, N.C., Aug. 6 - Bronco Drilling Co. shareholder Third Avenue Management LLC continues to oppose the company's merger with Allis-Chalmers Energy, Inc.
In an Aug. 6 letter to Bronco, Third Avenue said it plans to vote its advisory clients' 6.1 million shares, or 23.28% of Bronco's commons shares, against the transaction and urges other shareholders to do the same.
Third Avenue reiterated its position conveyed in an April 8 letter to Bronco: the implied merger value is inadequate.
"There is an unacceptably high business risk in Allis-Chalmers' common stock, both in regard to the integration of its 16 acquisitions between 2005 and 2007 and in the execution of a wide range of businesses, which is not reflected in the merger consideration," Third Avenue noted.
Third Avenue, Bronco's largest shareholder, also cited ISS Governance Services and Proxy Governance Inc. reports recommending that Bronco shareholders vote against the deal.
Shareholders opposed to the merger, in addition to Third Avenue, include Wexford Capital LLC and Alpine Associates, Third Avenue said.
On Jan. 24, Allis-Chalmers agreed to acquire Bronco Drilling in a cash and stock deal valued at $437.8 million.
It was previously reported that the total merger consideration will consist of $280 million in cash and Allis-Chalmers common stock valued at $157.8 million.
Houston-based Allis-Chalmers provides services and equipment to oil and natural gas exploration and development companies.
Bronco Drilling, located in Edmond, Okla., provides contract land drilling and workover services to oil and gas exploration companies.
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