Precision Drilling to Buy Grey Wolf: Reports

Canada's Precision Drilling(PDS Quote) has agreed to buy U.S. drilling company Grey Wolf(GW Quote) for about $2 billion in cash and stock, according to weekend media reports.

Under the deal, Precision Drilling, an oil and natural-gas driller, will pay $5 cash and 0.188 Precision shares for every Grey Wolf share, according to a report Sunday on The Wall Street Journal's Web site. An anonymous source close to the matter said the boards of both companies had agreed to the deal, the report added. If the deal is consummated, Grey Wolf shareholders will own about 25% of the combined company, according to the report.

Later Sunday, Reuters, also citing an anonymous source, reported that Precision Drilling had agreed to buy Grey Wolf for the terms mentioned by the Journal.

The news comes only weeks after Grey Wolf's shareholders rejected a merger with Basic Energy Services(BAS Quote), the Journal report noted.

Precision's offer comes as no surprise, as the company had already made multiple unsolicited offers for Grey Wolf and had promised to come back with an offer if Basic's bid was voted down, the Journal reported.

Grey Wolf shares gained 11 cents Friday to close at $8.59. Precision Drilling shares lost 70 cents to end the session at $21.35.