Arcapita to acquire drill bit manufacturer for $369M

Arcapita Inc., a leading private equity investment firm, announced that its affiliates have signed a definitive purchase agreement to acquire Varel Holdings Inc. from KRG Capital Partners for approximately $369 million. Varel is the world's fastest-growing manufacturer of drill bits for the oil and gas, and mining and industrial industries. 

Headquartered in Carrollton, Texas, Varel produces polycrystalline diamond compact and roller cone bits for the oil and gas drill bit market, as well as roller cone bits for other mining and industrial applications. With operations and sales offices in 41 countries, Varel serves a broad range of national and multi-national oil and gas companies and generates 50 percent of its revenue outside North America.

Stockton Croft, director at Arcapita, said, "Varel's growth is being driven by excellent industry dynamics, superior customer service and a talented and highly experienced management team.  In addition, Arcapita is excited about the opportunity to assist Varel in expanding its presence in the important markets of the Middle East, where Arcapita's local knowledge and extensive contacts will be a major competitive advantage for Varel."

Jim Nixon, CEO of Varel International, stated, "We are excited about continuing our growth journey with our new partner Arcapita. We look forward to leveraging Arcapita's strong relationships in the Middle East and to expanding our global position in Energy and Mining applications."

The transaction is expected to close in the fourth quarter of 2007 and is subject to regulatory approvals and other customary closing conditions.