Hart-Scott-Rodino Update
As previously reported, on March 18, 2024, Dril-Quip, Inc., a Delaware corporation (“Dril-Quip”), entered into an Agreement and Plan of Merger with Innovex Downhole Solutions Inc., a Delaware corporation (“Innovex”), Ironman Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Dril-Quip, and DQ Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of Dril-Quip, with respect to a proposed business combination between Dril-Quip and Innovex (the “Proposed Merger”).
The closing of the Proposed Merger is subject to the satisfaction or waiver of certain closing conditions, including, among others, the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”), and the required approvals under certain antitrust and foreign investment laws. As previously disclosed, Dril-Quip and Innovex each filed an HSR Act notification with the U.S. Federal Trade Commission and the U.S. Department of Justice on April 1, 2024. The applicable waiting period under the HSR Act expired at 11:59 p.m., Eastern Time, on May 1, 2024.
Steamfitters Complaint
On March 21, 2024, a purported Dril-Quip stockholder filed a putative class action complaint captioned Steamfitters Local 449 Pension Fund v. Dril-Quip, Inc., et al., C.A. No. 2024-0284-LWW (Del. Ch.) (the “Steamfitters Complaint”). The Steamfitters Complaint alleges that members of Dril-Quip’s Board of Directors (the “Board”) breached their fiduciary duties by agreeing, in connection with the proposed merger with Innovex, to enter into a stockholders agreement with Amberjack Capital Partners and certain of its affiliates (“Amberjack”) requiring Amberjack to vote in favor of the Board’s nominees at Dril-Quip’s 2025 annual meeting of stockholders and prohibiting certain transfers from Amberjack directly to activist stockholders not through public market sales. The Steamfitters Complaint further alleges that Innovex and Amberjack aided and abetted the directors’ alleged breaches of fiduciary duties. The complaint seeks an order certifying a class of Dril-Quip’s stockholders, finding that the directors breached their fiduciary duties and that Innovex and Amberjack aided and abetted the directors’ breaches of fiduciary duties, enjoining enforcement of the challenged provisions of the stockholders agreement, and awarding the plaintiff its reasonable attorneys’ and experts’ witness fees and other costs.
Although Dril-Quip and the Board believe that the stockholders agreement complies fully with all applicable law and deny the allegations in the Steamfitters Complaint, in order to moot the plaintiff’s claims, and avoid nuisance and possible expense, Dril-Quip has agreed to amend the stockholders agreement to eliminate the requirement for Amberjack to vote in favor of the Board’s nominees at Dril-Quip’s 2025 annual meeting of stockholders and the prohibition against certain transfers from Amberjack directly to activist stockholders not through public market sales. Amberjack also has agreed to amend the stockholders agreement to eliminate a provision entitling Amberjack to designate four director designees for election at Dril-Quip’s 2025 annual meeting of stockholders irrespective of Amberjack’s beneficial ownership of Dril-Quip’s common stock at that time. However, Amberjack will have the right to designate four director designees for election at Dril-Quip’s 2025 annual meeting of stockholders if it beneficially owns 40% or more of the number of shares of combined company common stock outstanding as of the closing of the merger. Dril-Quip’s and Amberjack’s agreement to amend the stockholders agreement shall not be deemed an admission of the legal merit of the claims asserted in the Steamfitters Complaint. To the contrary, Dril-Quip and the Board specifically deny all allegations in the Steamfitters Complaint that any breach of fiduciary duty occurred.
Important Information for Stockholders
In connection with the Proposed Merger, Dril-Quip has filed with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 (the “Registration Statement”) that included a proxy statement/prospectus (the “Proxy Statement/Prospectus”). The information in the Registration Statement is not complete and may be changed. Dril-Quip may file other relevant documents with the SEC regarding the Proposed Merger. This document is not a substitute for the Proxy Statement/Prospectus or Registration Statement or any other document that Dril-Quip may file with the SEC. After the Registration Statement is declared effective, the Proxy Statement/Prospectus will be mailed to the stockholders of Dril-Quip in connection with Dril-Quip’s solicitation of proxies for the vote of Dril-Quip stockholders in connection with the Proposed Merger and other matters as described in such Proxy Statement/Prospectus, and will serve as the prospectus relating to the offer of the securities to be issued to certain of Innovex’s securityholders in connection with the completion of the Proposed Merger. STOCKHOLDERS
