Management in Saxon Energy Services is unlikely to sway a planned vote on the sale of the company, as the single largest executive shareholder is using the $590-million takeover as a way to exit the business.
Saxon has agreed to a $7-a-share offer Monday from oil field services giant Schlumberger Ltd. and private equity fund First Reserve Corp. The offer needs approval from two-thirds of Saxon's shareholders, and Saxon indicated in a press release that management and directors hold 14 per cent of the shares and intend to vote for the deal.
To the extent Saxon executives plan to stick around after the buyout to run the company, they stand to do extremely well if the company prospers. So the prospect of the leverage buyout would bias these management shareholders.
However, Saxon co-founder Walter Dawson, aged 67, plans to support the bid for the company, but will not have an ongoing role in the firm, sources say. He owns 10-per-cent of Saxon, or a $59-million stake, and is cashing in his chips. So obviously, his bias is to gettign the best possible price for the company.
The remaining Saxon management team owns less than 4 per cent of the company, so their impact on the outcome of the vote is small.
Minority investors such as Irwin Michael, whose Toronto-based I.A. Michael Investment Counsel owns 7.4 per cent of the Saxon, have already flagged that they are unhappy with the price - analysts had targets of up to $8 on the stock.
RBC Dominion Securities is advising First Energy on this transaction. Schlumberger's investment bank is CIBC World Markets. Thomas Weisel Partners gave Saxon's indpendent directors a favourable fairness opinion.
