For Immediate Release
Varel International Announces Completed Acquisition by Arcapita for $369 Million
World’s fastest growing drill bit company receives funding to deliver continued product innovation, performance and service
(DALLAS, 12 November 2007) – Varel International Inc., the world’s fastest growing drill bit company, announces the completion of its sale to an affiliate of Arcapita Inc., a leading private equity firm based in Atlanta. Varel, a technology leader in the oil and gas, and mining and industrial industries, was purchased from KRG Capital Partners, a Denver-based private equity firm, for approximately US $369 million. This transaction was completed to provide funding to further accelerate Varel’s growth and product offering.
“This transaction with Arcapita is an important milestone in Varel’s journey to be recognized as a leading global drill bit company,” said Jim Nixon, President & CEO of Varel International. “In the past few years, Varel has achieved explosive growth. We want to continue this growth by delivering more product innovation, product performance and service to the industries we serve. Arcapita is fully committed to helping us achieve these objectives. We are proud to have them as our new partner.”
The sale does not affect any of Varel’s 1,100 employees working in 41 countries. The current Varel executive management team will continue to develop and manage the strategic direction and operations of the company.
Future Priorities: Continued Product Innovation, Performance and Service
During the past few years, Varel has invested heavily to achieve world-class performance from its polycrystalline diamond compact (PDC) and roller cone drill bits. Arcapita will support Varel with capital investments for product innovation and improved manufacturing capabilities, which will further enhance product reliability and performance. The company plans to expand its global PDC business so as to meet the growing demands of customers using these products. Additionally, new lean manufacturing initiatives for the company’s 175,000 sq ft roller cone manufacturing facility will continue to be a priority, ensuring product quality and reducing cycle times for customers in the oil and gas, and mining and industrial industries. Varel will continue its global expansion efforts by employing service-oriented professionals who possess both local drilling and technical drill bit knowledge. The company will leverage Arcapita’s significant Middle East resources and network to accelerate market penetration in this important region.
Arcapita’s Stockton Croft, who led the deal for Arcapita, added “We believe that Varel is well positioned for further growth, particularly in the important markets of the Middle East, where Arcapita’s local knowledge and extensive contacts will be a major competitive advantage for Varel. We are looking forward to a close relationship with Varel’s accomplished management team to fulfill this potential.”
About the Transaction
The transaction was managed by Arcapita with input from former Varel majority stockholder, KRG Capital Partners as well as the current Varel executive management team.
When asked about the transaction process, Nixon said, “This was an enormous effort by all parties, and we appreciate the professionalism and fortitude by all of those involved. This transaction will ensure continued success for Varel. We are excited about continuing our growth journey with our new partner and are confident it will bring value to our customers and our employees.”
About Varel International
Founded in 1947, Varel International is the world's largest independent manufacturer of drill bits. Headquartered in Carrollton, Texas, Varel services oil & gas, mining, and industrial markets with its comprehensive suite of roller cone and fixed cutter drill bits. The Company employs 1,100 people and has manufacturing facilities in Carrollton, Texas; Houston, Texas; Matamoros, Mexico and Tarbes, France, as well as sales offices throughout the world. Varel's proprietary design capabilities, efficient manufacturing, and global sales force uniquely positions the Company to provide high-quality drill bits that deliver excellent performance and value to its customer base. More information about Varel International is available at www.varelintl.com.
About Arcapita
Arcapita Inc. is a wholly owned subsidiary of Arcapita Bank B.S.C.(c), which is a global investment firm with offices in Atlanta, Bahrain, London and Singapore, through which it sources investments for its corporate (private equity), real estate, asset based and venture capital lines of business. Arcapita's corporate investment line of business was founded in 1997 and operates out of Atlanta, London and Bahrain. To date, Arcapita has completed 63 transactions with a total value of almost $21 billion. More information on Arcapita is available online at www.arcapita.com.
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Media contacts:
Sherri Scott
Varel International
Tel: +1.281.670.2401
E-mail: sscott@varelintl.com
Holly Brochmann
Hope-Beckham, Inc.
Tel: +1.404.604.2607
Mobile: +1.972.816.8598 Mobile: +1.936.552.1243
Email: hbrochmann@hopebeckham.com
