The all-stock deal will see Precision issue 0.445 shares of common stock for each outstanding Trinidad share.
Precision, which expects to save $30 million through the deal, said the combined entity will have an enterprise value of approximately $4 billion and operate under the Precision name. But the Trinidad panned the offer, saying it was not in the "best interests" of Trinidad or its shareholders.
Excluding debt, the deal is valued at C$551 million and is expected to close in late-2018.
Trinidad had been shopping itself around for several months as part of its strategic review.
The Precision and Trinidad boards unanimously approved the merger, which is subject to regulatory and shareholder approvals. "Within two weeks, (Ensign) boosted its offer to surpass (Precision's) by 9 per cent, thus "winning" the competition for AOGC", Bradford said.
Ensign had suggested previously that the absence of a deal after the formal search meant the odds of a rival bid to its own were low.
"This combination comes after a comprehensive process to review all available alternatives and to maximize value for our shareholders", Trinidad president and CEO Brent Conway said in a release.
Trump's controversial nominee Brett Kavanaugh sworn in as SC Judge amid protests
Kavanaugh's nomination process has been plagued in recent weeks by sexual misconduct allegations made by three women. But she is technically not a vote. "I was assaulted when I was younger and I didn't tell anybody".
Trinidad is now touting the Precision deal. "We can realize immediate synergies, estimated to be over C$30 million, through fixed cost reductions, operational efficiencies and reduced public company costs".
The company said Trinidad's fleet of 141 drilling rigs includes 61 high spec AC rigs that fit 90 per cent within Precision's standardization protocols and are equipped with major components that are well aligned for fleet integration. "The combination provides a truly unique opportunity to combine two highly focused drilling contractors that are pursuing similar growth initiatives and competitive strategies and importantly, operating similar Tier 1 assets".
"The incremental free cash flow generated through this combination will ensure Precision meets or exceeds our long-term debt reduction targets and improves our financial flexibility to pursue growth opportunities in the United States and in worldwide markets", Neveu said.
Equities research analysts at Jefferies Financial Group issued their Q3 2018 earnings per share (EPS) estimates for Precision Drilling in a note issued to investors on Wednesday, October 3rd. Over the long term, the additional scale will further strengthen Precision's operating leverage and positions the company to service our customers' continued transition to high performance drilling services with high spec AC rigs.
A combined Precision-Trinidad would have more than 200 active rigs in its North American fleet after the transaction, and 322 total rigs. It also engages in construction and insurance businesses; and provides rig technology and labor services.
The Precision-Trinidad merger is positive for the Canadian drilling market because it will reduce an oversupply of rigs chasing too few wells, said Houston-based analyst Taylor Zurcher of Tudor Pickering Holt & Co.
In 2019, Precision said it expects to realize more than $30 million in annual synergies through corporate efficiencies and facility consolidations.