C&J Energy ordered to pause merger with Nabors unit

A Delaware state judge has called a timeout in C&J Energy Services' $2.9 billion merger with Nabors Industries' hydraulic fracturing business, creating a short window for outside buyers to make bids for a player in the U.S. oil patch's biggest services business.

C&J Energy said Tuesday the judge ordered a 30-day suspension of the deal and required the company's board to shop around to get the best price possible for the company, a central issue in a shareholder lawsuit filed to stop the deal. The Houston oil field equipment company said it will appeal to the Delaware Supreme Court.

It said it doesn't agree "that under the circumstances of this transaction the board was obligated to solicit proposals to acquire the company before executing the merger agreement," C&J Energy CEO Josh Comstock said in a written statement. He said the company remains focused on closing the deal as soon as possible.

The cash and stock transaction, announced in late June, would link up two oil field equipment companies that provide pressure pumping services, a highly fractured market that's expected to see more consolidation as Halliburton and Baker Hughes work to complete the merger they announced last week.

Analysts say C&J Energy could approach Schlumberger or Weatherford, both of which may be looking to expand as Halliburton and Baker Hughes attempt a $35 billion tie-up, but it probably won't get a better price from either as oil prices have fallen dramatically since the June announcement of the C&J-Nabors merger.

"We don't expect anyone else to emerge as a potential suitor," said Praveen Narra, an analyst with Raymond James. Narra said any competing offer isn't likely to beat the original $2.9 billion price tag.

The judge's order probably will do no more than turn up the required "no" from the big oil field service companies, said Marc Bianchi, an analyst with Cowen & Co.

Houston-based C&J Energy's stock market value was just over $1 billion on Monday. Rig contractor Nabors, which is based in Bermuda but has main offices in Houston, was worth nearly $4.8 billion. Combined, the two have 10,000 employees in the U.S. and Canada.

The new business would be called C&J Energy Services Ltd.