MRC Global, DNOW Gain After $1.5B Merger Deal, Retail’s Bullish

Energy and industrial products supplier MRC Global (MRC) rose 12.6% in extended trading on Thursday after peer DNOW Global (NOW) in an all-stock transaction valued at approximately $1.5 billion.

The combined company will serve energy, gas utility, and industrial customers with more than 350 service and distribution locations across more than 20 countries. MRC Global stock rose 4.7%.

Under the deal terms, MRC Global shareholders will receive 0.9489 shares of DNOW common stock for each share of MRC Global common stock, representing an 8.5% premium to MRC Global’s 30-day volume-weighted average price of $12.77 as of June 25.

MRC Global, a distributor of pipe, valves, fittings, and automation products, stated that the combined company is expected to generate $70 million in annual cost savings within three years following the closing, primarily through reductions in public company costs, corporate and IT systems, and operational and supply chain efficiencies.

Following the closing, expected in the fourth quarter, DNOW’s Board of Directors will expand from eight to 10 directors to include two of MRC Global’s current independent board members. The combined company will remain headquartered in Houston, Texas, and will be led by the MRC CEO, David Cherechinsky.

DNOW has secured commitments to expand its existing credit facility by $250 million at the close of the merger, the company said.

Retail sentiment on Stocktwits about both MRC Global and DNOW was in the ‘bullish’ territory,

One retail trader said that the company was paying a modest premium.

DNOW and MRC Global rose 14.6% and 3.5%, respectively.

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