UPDATE: BMO Capital Markets Reiterates Market Perform Rating, Lowers PT on Union Drilling

In a report published Wednesday, BMO Capital Markets reiterated its Market Perform rating on Union Drilling

, but slightly lowered its price target from $7.00 to $6.50. BMO Capital noted, “Union Drilling and Sidewinder Drilling have announced that privately held Sidewinder has agreed to acquire Union for US$242 million (including debt) or $6.50/share in an all-cash transaction. While the purchase price represents a discount to our estimated equipment replacement value of roughly US$12.50/share, we do not envision another buyer emerging and believe that the transaction will ultimately close as currently proposed. Union's shares are up nearly 70% since early August and thus the purchase price reflects only a modest premium of 6% to the closing price before the announcement. Based on our 2013 EBITDA estimate of approximately US$57 million, the purchase price represents a multiple of 3.8x, a small premium to Union's small-to-mid-cap U.S. land drilling peers and a slight discount to the small-cap Canadian land drilling group average. Union's board has unanimously approved of the deal, which is expected to close in Q4/12.” Union Drilling closed on Tuesday at $6.47.