GAMCO: Dril-Quip’s ‘ISS For Merger’ Claim Is Contrary To ISS’s Actual Position
GAMCO Asset Management Inc., owning 8.32% of Dril-Quip (NYSE: DRQ), plans to vote against the proposed merger with Innovex Downhole Solutions. GAMCO highlights that Institutional Shareholder Services (ISS) recommended voting against amending Dril-Quip's certificate of incorporation, a condition for the merger. GAMCO criticizes Dril-Quip's press release as deceptive, emphasizing that ISS's recommendations effectively oppose the merger. Key concerns include:
1. No control premium payment by Innovex and Amberjack Partners
2. Innovex's management taking over the combined company
3. Amberjack Partners gaining board control
4. 35.8% stock price decline since merger announcement
5. Golden parachutes for current Dril-Quip management
GAMCO argues that shareholder value has been destroyed while Dril-Quip's management benefits from the change of control.
GAMCO Asset Management Inc., che possiede l'8,32% di Dril-Quip (NYSE: DRQ), intende votare contro la proposta di fusione con Innovex Downhole Solutions. GAMCO sottolinea che Institutional Shareholder Services (ISS) ha raccomandato di votare contro la modifica del certificato di incorporazione di Dril-Quip, un requisito per la fusione. GAMCO critica il comunicato stampa di Dril-Quip come fuorviante, enfatizzando che le raccomandazioni dell'ISS si oppongono effettivamente alla fusione. Le preoccupazioni principali includono:
1. Nessun pagamento di premio di controllo da parte di Innovex e Amberjack Partners
2. Il management di Innovex che assume il controllo della società combinata
3. Amberjack Partners che ottiene il controllo del consiglio
4. Declino del 35,8% del prezzo delle azioni dall'annuncio della fusione
5. Golden parachutes per l'attuale management di Dril-Quip
GAMCO sostiene che il valore per gli azionisti è stato distrutto mentre il management di Dril-Quip trae vantaggio dal cambiamento di controllo.
GAMCO Asset Management Inc., que posee el 8.32% de Dril-Quip (NYSE: DRQ), planea votar en contra de la fusión propuesta con Innovex Downhole Solutions. GAMCO destaca que Institutional Shareholder Services (ISS) recomendó votar en contra de la enmienda del certificado de incorporación de Dril-Quip, una condición para la fusión. GAMCO critica el comunicado de prensa de Dril-Quip como engañoso, enfatizando que las recomendaciones de ISS se oponen efectivamente a la fusión. Las principales preocupaciones incluyen:
1. Ningún pago de prima de control por parte de Innovex y Amberjack Partners
2. La dirección de Innovex asumiendo el control de la empresa combinada
3. Amberjack Partners obteniendo el control de la junta
4. Caída del 35.8% en el precio de las acciones desde el anuncio de la fusión
5. Golden parachutes para la actual dirección de Dril-Quip
GAMCO argumenta que se ha destruido el valor para los accionistas mientras que la dirección de Dril-Quip se beneficia del cambio de control.
GAMCO 자산 관리 주식회사(GAMCO Asset Management Inc.)는 Dril-Quip (NYSE: DRQ)의 8.32%를 소유하고 있으며, Innovex Downhole Solutions와의 제안된 합병에 반대하여 투표할 계획입니다. GAMCO는 Institutional Shareholder Services (ISS)가 Dril-Quip의 정관 개정을 반대하는 투표를 권장했다고 강조합니다. 이것은 합병의 조건입니다. GAMCO는 Dril-Quip의 보도자료를 기만적이라고 비판하며, ISS의 권장 사항이 합병에 효과적으로 반대한다고 강조합니다. 주요 우려 사항은 다음과 같습니다:
1. Innovex와 Amberjack Partners가 지불하는 통제 프리미엄이 없음
2. Innovex 경영진이 합병된 회사의 경영권을 장악
3. Amberjack Partners가 이사회 통제권을 얻음
4. 합병 발표 이후 35.8%의 주가 하락
5. 현재 Dril-Quip 경영진을 위한 황금 낙하산
GAMCO는 주주 가치는 파괴되었지만 Dril-Quip의 경영진이 권력 변화에서 이득을 보고 있다고 주장합니다.
GAMCO Asset Management Inc., qui possède 8,32 % de Dril-Quip (NYSE: DRQ), prévoit de voter contre la fusion proposée avec Innovex Downhole Solutions. GAMCO souligne que Institutional Shareholder Services (ISS) a recommandé de voter contre la modification du certificat de constitution de Dril-Quip, une condition préalable à la fusion. GAMCO critique le communiqué de presse de Dril-Quip comme trompeur, en soulignant que les recommandations de l'ISS s'opposent effectivement à la fusion. Les principales préoccupations incluent :
1. Pas de paiement de prime de contrôle par Innovex et Amberjack Partners
2. La direction d'Innovex prenant le contrôle de la société combinée
3. Amberjack Partners obtenant le contrôle du conseil d'administration
4. Baisse de 35,8 % du prix de l'action depuis l'annonce de la fusion
5. Golden parachutes pour la direction actuelle de Dril-Quip
GAMCO soutient que la valeur pour les actionnaires a été détruite tandis que la direction de Dril-Quip bénéficie du changement de contrôle.
GAMCO Asset Management Inc., die 8,32 % an Dril-Quip (NYSE: DRQ) hält, plant, gegen die vorgeschlagene Fusion mit Innovex Downhole Solutions zu stimmen. GAMCO hebt hervor, dass Institutional Shareholder Services (ISS) empfohlen hat, gegen die Änderung der Satzung von Dril-Quip zu stimmen, was eine Bedingung für die Fusion darstellt. GAMCO kritisiert die Pressemitteilung von Dril-Quip als irreführend und betont, dass die Empfehlungen der ISS effektiv gegen die Fusion sprechen. Die Hauptanliegen umfassen:
1. Keine Zahlung einer Kontrollprämie durch Innovex und Amberjack Partners
2. Das Management von Innovex übernimmt die Kontrolle über das fusionierte Unternehmen
3. Amberjack Partners erlangt die Kontrolle über den Vorstand
4. Rückgang des Aktienkurses um 35,8 % seit der Bekanntgabe der Fusion
5. Goldene Fallschirme für das aktuelle Management von Dril-Quip
GAMCO argumentiert, dass der Wert für die Aktionäre zerstört wurde, während das Management von Dril-Quip von der Veränderung der Kontrolle profitiert.
- None.
- GAMCO (8.32% shareholder) opposes Dril-Quip's merger with Innovex
- ISS recommends voting against amending Dril-Quip's certificate of incorporation, a merger condition
- No control premium payment for Dril-Quip shareholders
- Innovex and Amberjack Partners to gain control of the combined company
- 35.8% decline in Dril-Quip's stock price since merger announcement
- Estimated $11.9 million in golden parachutes for Dril-Quip's CEO and CFO
The proposed merger between Dril-Quip and Innovex raises significant concerns for shareholders. The 35.8% decline in Dril-Quip's stock price since the merger announcement, compared to only a 6.8% decline in the VanEck Oil Services ETF, suggests the market views this deal unfavorably. The lack of a control premium and the potential transfer of control to Innovex and Amberjack Partners without adequate compensation are red flags. Moreover, the
This merger proposal raises serious governance concerns. The planned board structure, with Innovex and Amberjack Partners appointing 5 out of 9 directors, effectively transfers control without proper compensation to existing shareholders. ISS's recommendation against amending the certificate of incorporation is telling, as it would "benefit one investor at the expense of existing shareholders." The reduction in maximum board size from 12 to 9 could limit diversity and independent oversight. Additionally, Dril-Quip's misleading press release about ISS's position undermines transparency. These factors, combined with the generous exit packages for current management, suggest a potential misalignment of interests between leadership and shareholders.
This merger structure appears unfavorable for Dril-Quip shareholders. The lack of a control premium is unusual in takeover scenarios, especially given Innovex will gain effective control of the combined entity. The rebranding to Innovex Downhole Solutions and installation of Innovex's management team further emphasize this is more of a takeover than a merger of equals. The market's negative reaction, significantly underperforming the sector index, indicates skepticism about the deal's value creation potential. The generous change-of-control benefits for Dril-Quip's executives, totaling
On August 16, 2024, Institutional Shareholder Services (“ISS”) published its report on Dril-Quip’s merger with Innovex. In summary, ISS recommended voting in favor of the proposal to issue shares in connection with the merger, but it recommended voting against the proposal to amend Dril-Quip’s certificate of incorporation. Both proposals must be passed as a condition to closing the merger. ISS’s recommendations are actually a vote against the merger and further highlight governance concerns connected to the transaction. Dril-Quip issued a press release on August 19, 2024, with a deceptive headline indicating that ISS recommend stockholders vote for Dril-Quip’s merger with Innovex.
With respect to the proposal to amend Dril-Quip’s certificate of incorporation ISS detailed that Dril-Quip “has not presented a compelling rationale for conditioning the merger on approval of charter amendments which will benefit one investor at the expense of existing shareholders.” (1)
Innovex and Amberjack Partners (which owns
Shareholder value has been destroyed since the announcement of this merger, while current Dril-Quip’s management exits with golden parachutes. Dril-Quip’s stock price was
(1) Permission to use quote was neither sought nor obtained.
GAMCO Investors, Inc., through its subsidiaries, manages assets of private advisory accounts (GAMCO), mutual funds and closed-end funds (Gabelli Funds, LLC) and is known for its Private Market Value with a Catalyst™ style of investment.
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Robert Leininger
Chair, Proxy Voting Committee
(914) 921-7754
For further information please visit
www.gabelli.com
Source: GAMCO Investors, Inc.
FAQ
Why is GAMCO voting against the Dril-Quip and Innovex merger?
What was ISS's recommendation regarding the Dril-Quip and Innovex merger?
How has Dril-Quip's stock price (DRQ) performed since the merger announcement?
What changes to Dril-Quip's board are proposed in the merger?
