Bristow Group’s plan to merge with Oregon-based Columbia Helicopters appears to have hit a snag. In November, Bristow announced its intention to acquire Columbia for $560 million in a cash/debt/stock deal that was expected to close by the end of 2018. One month after announcing the deal, Bristow filed a Form 8-K with the U.S. Securities and Exchange Commission in which it revealed, “The purchase agreement provides for the acquisition by the purchaser of all of the issued and outstanding shares of Columbia (the “acquisition”) on the terms and subject to the conditions set forth in the purchase agreement. Based upon current market conditions, the company no longer expects to complete the acquisition on or before December 31, 2018.”
The purchase agreement provides that either party can terminate the deal if it does not close by April 9, 2019, subject to an additional “marketing period.” If the deal fails, Bristow would owe Columbia a $20 million termination fee.
Under terms of the proposed deal, the Lematta family and current management will convert their $77 million stake in Columbia to 7.1 million shares of Bristow stock, which plunged 20 percent to $7.96 a share immediately after the deal was announced. Bristow’s share price has continued to fall, reaching a low of $2.12 per share on December 24 before rebounding in recent days to the $3 range as the price of oil began rising again from year-end lows that approached $40 per barrel.
Last week, a Bristow spokesman told AIN that the company was still “working hard” to close the deal. However, the dramatic drop in Bristow’s share value since the deal was announced raises the possibility that the company might need to raise more cash to close it, delay closing in the hope that its share price will continue to improve, or a combination of both.
When the deal was announced, Bristow said it would yield immediate financial benefits by allowing Bristow to access Columbia’s MRO capabilities, heavy-lift helicopters, and military approval certificates to cut costs and diversify from the volatile offshore energy sector.