Drilling Tools International Corp. (NasdaqCM:DTI) entered into a definitive merger agreement to acquire Superior Drilling Products, Inc. (NYSEAM:SDPI) for approximately $32.2 million on March 6, 2024. The consideration is payable in cash and DTI stock. As reported, each share of SDPI common stock issued and outstanding immediately prior to the effective time shall be converted into the right to receive, without interest, at the election of the holder thereof: $1.00 in cash for each share of Company Common Stock with respect to which an election to receive cash has been made and not revoked or lost and 0.313 validly issued shares of DTI common stock for each share of SDPI common stock with respect to which an election to receive stock has been made and not revoked or lost. For each share of SDPI common stock with respect to which no election to receive the cash election consideration or the stock election consideration has been made, the cash election consideration or the stock election consideration, will be provided in the proration mechanics. The maximum share amount is determined as 4,845,240 shares of DTI common stock. Upon termination of the merger agreement under specified circumstances in order to enter into a SDPI Superior Proposal, SDPI will be required to pay DTI termination fee of $987,715.77 in cash.

The closing of the transaction is conditional upon effectiveness of the Form S-4 Registration Statement, the required SDPI shareholder vote shall have been obtained, the shares of DTI common stock to be issued pursuant to the merger shall have been approved for listing, and others. The special committee of the Board of Directors of SDPI has unanimously determined that the agreement is in the best interests of SDPI and its shareholders and recommended that the SDPI Board approve the transaction. The transaction was unanimously approved by the Board of Directors of DTI and SDPI. The closing of the transaction is expected to occur in the third quarter of 2024. Michael J. Blankenship of Winston & Strawn LLP acted as legal advisor to DTI. Randolph Ewing of Ewing Jones, PLLC acted as legal advisor to SDPI, and Sam Gardiner, Jodi Simala and Ryan Ferris of Mayer Brown LLP acted as legal advisors to the Special Committee of the Board of Directors of SDPI. Growth Energy Capital Advisors LLC served as financial advisor to DTI, and Piper Sandler & Co. served as exclusive financial advisor to the Special Committee of the Board of Directors of SDPI.