Avon, Massachusetts -- Cuming Corp., which manufactures syntactic foam flotation products and insulation materials for the offshore oil and gas industry, is to be bought by Houston-based oilfield service company Deep Down Inc.
The total price, including Deep Down assuming certain liabilities, is $50.0 million.
Cuming's revenue for the year ending 31 Dec 2009 was about $73.3 million with a gross profit of $15.0 million. The purchase is subject to conditions, including Deep Down obtaining financing through a private placement offering for the payment of the purchase. As of 31 March 2010, the company said, it had booked backlog and signed letters of intent representing $138 million and $32 million of orders, respectively.
Cuming management estimates that the deal will close in about one month.
Discussing the reasons behind the deal, John Cuming, chairman/cfo and principal owner, said, "The worldwide search for offshore energy has resulted in unprecedented growth for our company. ... We are enjoying record sales and order backlog and we have quadrupled our production capacity in order to meet the huge demand for our products."
At the same time, He added, "We are searching for ways to expand our business into new overseas markets such as Brazil and the Far East."
Hence, Cuming said, "It makes sense for us to join forces with Deep Down and integrate our product line with Deep Down's other oil and gas and marine businesses such as Flotation Technologies. This acquisition will enable us to better serve our existing customers as well as hopefully gain new ones."
Meanwhile Larry Parkinson, Cuming's president, explained that, "Growth of the magnitude we are projecting will require increased capital and resources that are more readily available from a publicly traded company such as Deep Down."
Avon, Massachusetts-headquartered Cuming has about 250 employees, supplying C-FLOAT buoyancy products, used to support both drilling and production risers in deepwater operations. It says its C-THERM insulation products manufactured at Cuming's New Iberia, Louisiana, facility are, "the highest performance materials available for protecting ultradeep high temperature wells." Another product, C-TECH, also made in New Iberia, provides "unique properties guarding subsea well casings," the company claims.
Deep Down's technological services include distribution systems, installation support and engineering services, umbilical terminations, loose-tube flying leads, flotation and drill riser buoyancy, ROVs (remotely operated vehicles) and toolings.