Grey Wolf Shoots Down Precision Drilling's $1.6 Billion Bid

Contract oil driller Grey WolfThursdayturned down Precision Drilling Trust's $1.6 billion unsolicited bid, opting to go forward with its acquisition of Basic Energy Services instead.

Grey Wolf said its board concluded that the Precision Drilling bid would not be better for the company than its deal with Basic.

It said the merger agreement between Grey Wolf and Basic is still in effect.

Canada's Precision Drilling announced its $9 a share, cash and stock bid Tuesday, saying Grey Wolf's assets would help it build its business in the United States.

But Grey Wolf had already agreed to buy Basic Energy Services in April, in a deal that would merge the two companies into a new entity still called Grey Wolf and majority-owned by Grey Wolf's shareholders.

That deal would combine Grey Wolf's land drilling rig fleet with Basic Energy's land-based well servicing equipment.

The companies have also said the combined company would have more financial flexibility and could return $600 million in cash to its shareholder base.

Shares of Grey Wolf were up 3 cents at $9.35 in early American Stock Exchange trading, while Basic Energy Services rose 89 cents, or 3.2 percent, to $28.99 on the New York Stock Exchange.

Precision Drilling Trust units fell 16 cents to C$27.40 on the Toronto Stock Exchange.