Update: Dril-Quip's Proposed Merger With Innovex Endorsed by Proxy Advisory Firm ISS

(Updates with Innovex Downhole's response in the seventh paragraph.)

Dril-Quip (DRQ) said Monday that proxy advisory firm Institutional Shareholder Services, or ISS, has recommended that Dril-Quip shareholders vote for a proposed merger with Innovex Downhole Solutions at the Sept. 5 special meeting.

The merger will diversify Dril-Quip's operations away from an entirely offshore focus and toward onshore operations, the proxy advisory firm said in a report Friday.

ISS said there is "no clear link" between the share price decline and the announcement of the merger.

"Although there may be concerns with share price performance since announcement, a vote for the proposed transaction is warranted in light of the strategic rationale, anticipated synergies, and the downside risk of non-approval," the ISS said.

The proxy advisory firm also said the merger will result in roughly $30 million in annual cost savings and the combined entity will have "increased global scale and footprint," with market expansion opportunities in Canada, continental US, Saudi Arabia, and global offshore.

The combined entity is anticipated to have an "enhanced financial position" and a "strong balance sheet."

"We look forward to the consummation of this transaction and executing on our strategy which we believe will result in significant value creation for all shareholders," Innovex Chief Executive Adam Anderson said in a statement emailed to MT Newswires.