National Oilwell Varco Inc. said Tuesday that it is exploring a plan to spin off its distribution business to its shareholders as a separate, publicly-traded company. The new company would provide maintenance, repair and operating supplies to energy and industrial companies. The spinoff is expected to be finished in the first half of next year. It's subject to market conditions, regulatory approvals, and final board approval. The spinoff does not need shareholder approval, the company said.
After two acquisitions last year, the distribution business "now has the market size and scale to operate as a standalone, world class distribution company," said Chairman and CEO Pete Miller in a statement. He said the standalone distribution group would have 415 locations and operations in 26 countries. The units involved in the spin off would represent about 85 percent of the revenue of NOV's distribution and transmission segment for the six months ended June 30, the company said. That would amount to about $1.64 billion, based on the company's second-quarter report. "As separate companies, the distribution business and the remainder of NOV will each be better positioned and have the enhanced operational flexibility to focus on their specific products, services and customers," he said.
National Oilwell Varco designs, builds, and sells equipment and components for oil and gas drilling and production, and also provides oilfield services and supply chain services to the oil and gas industry. Its shares rose $1.99, or 2.5 percent, to $80.50 in premarket trading. The stock closed Monday at $78.50, up about 15 percent since the start of the year.