Oil executives have flocked to New Orleans this week for the famed Howard Weil Energy Conference, and there's lots of deal talk going on in between trips to Bourbon Street. One executive who is likely too busy for Bourbon Street, however, is Danny McNease, CEO of oil equipment and services provider
Rowan Cos.
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Last month Rowan, under pressure from activist hedge fund Steel Partners, hired Lehman Brothers Inc. and Morgan Stanley to field bids for its offshore jack-up drilling rig manufacturing unit LeTourneau Technologies Inc. While at the conference, McNease indicated that there is strong demand for the unit.
"A lot of people are talking to us about merging with them," Reuters quoted him as saying. "We think now is the time."
Indeed, McNease noted the big void between the largest maker of drilling rigs, National Oilwell Varco Inc., and Rowan, so a deal would be one way to add size and compete. Rowan's stock shot up 2% on the news.
Besides sky-high oil prices, there's a big reason why Rowan would consider dumping LeTourneau: hedge fund Steel Partners II LP, which owns 9.1% of the company and has urged it to explore ways to monetize the unit. Rowan agreed to consider selling it if Steel Partners agreed to withdraw three nominees to its board. But Rowan has a deadline: If it doesn't sell LeTourneau by year's end, either Steel Partners managing member Warren Lichtenstein or another person designated by Steel Partners will be added to Rowan's board Jan. 1.
Buyers for the $1 billion (sales) unit could include National-Oilwell Varco and international shipyard groups such as Keppel FELS Ltd., which is part of Singapore-based Keppel Offshore & Marine.
In the meantime, laissez les bons temps rouler. - Claire Poole
