C&J Energy, Nabors Merger on Hold

A Delaware court has held up the merger of oilfield services provider Nabors Industries Ltd's unit with C&J Energy Services Inc, saying C&J's board did not adequately shop the company, the Wall Street Journal reported, citing people familiar with the decision.

A judge, at a hearing Monday in the Delaware Court of Chancery, suspended the deal for 30 days, during which he ordered the C&J board to feel out other potential buyers, the Journal reported. (http://on.wsj.com/1ph67ja)

Nabors said in June it would merge its well maintenance business with C&J Energy Services and receive $2.86 billion in cash and stock.

Nabors will get about $937 million in cash and some 62.5 million shares of the combined company, which will be managed by the current C&J Energy management team.

This deal is one of a handful of pending U.S. corporate tax inversions.

The companies are using a deal structure known as Reverse Morris Trust - a transaction that allows a parent company to sell its unit in a tax-efficient manner.

Vice Chancellor John Noble found that because the C&J Energy shareholders were essentially turning over control of their investment to Nabors, the deal was subject to a corporate law theory that required the board to take steps to get the best possible price, the Journal reported.

The suit, brought by lawyers for C&J Energy shareholders, said the board failed to take such steps, the report said.

Nabors's completion and production services business maintains oil wells throughout their life spans and also provides services to plug and abandon the wells.

Nabors and C&J Energy Service were not immediately available for comment.

Reporting By Neha Dimri