Downhole Products Limited (DHP), a fully owned subsidiary of Varel Oil and Gas Inc., has successfully completed its acquisition of a 100% stake in Sledgehammer Oil Tools Private Limited. This strategic move, advised by JSA, was executed in two phases over two years, with DHP initially acquiring 78% of Sledgehammer in June 2022 and finalizing the remaining 22% in October 2024.
Varel, recognized as a leading manufacturer in the downhole drilling and completions sector, structured the transaction to optimize its investment. The acquisition utilized a two-tranche system, allowing for flexibility either through share purchase or buyback options. The first tranche’s consideration was carefully crafted using a locked box mechanism, ensuring payments were made in two distinct phases: an initial fixed sum and a deferred amount to cover any unforeseen adjustments.
As part of this acquisition, the properties owned by Sledgehammer were sold to the promoter group and subsequently leased back to the company under a long-term agreement, positioning DHP for enhanced operational efficiency and growth in the competitive energy landscape.
