Boart Longyear shares surge over 50% on takeover plan

The news: Shares in drilling services firm Boart Longyear have surged on the ASX after the company said its board had agreed to a takeover by a US private equity fund.

The numbers: Boart said it had agreed to a buyout by American Industrial Partners Capital Fund III in a deal that values the company at USD371 million ($544 million). The fund will pay USD1.95 ($2.86) a share in cash, a 64% premium to Boart’s closing price last week. Shares in the company surged more than 54% to $2.70 in early trading after the news.

The context: Boart, which is based in the US state of Utah, said each of its five biggest institutional shareholders had agreed to the deal. These five shareholders own the overwhelming majority of the business. The Australian-listed company has been through a series of recapitalisations over the last decade, which involved lenders converting part or all of their debt to equity. It mainly provides drilling services to miners in the gold and copper industries.