Schlumberger N.V (SLB), a technology supplier to the oil and gas industry, said Wednesday that it has entered into a definitive agreement to acquire its peer, Cameron global Corporation (CAM), in a cash-and-stock transaction.
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The deal comes at a time of increased consolidation in the oil industry as companies seek to protect themselves from falling energy prices. The companies are the number two and three oil-field servicers, respectively.
Schlumberger, the world’s No. 1 oilfield services company, has cut 20,000 jobs this year alone and lowered its capital budget to maintain margins. Schlumberger provides oil and gas producers with a full array of services from surveying a site to drilling and completing wells. That’s a 56 percent premium to the Houston company’s Tuesday closing price of $42.47. Shares of Schlumberger fell 2 percent to $71.05 a share in pre-market trading.
Last month, Halliburton and Baker Hughes agreed to extend until at least November. 25 the Justice Department’s antitrust review period of their merger.
That deal has run afoul U.S. antitrust enforcers who believe the $35 billion-merger could lead to higher prices and stifle innovation, according to Reuters sources.
‘By bringing together Cameron and Schlumberger, we will be uniting two great companies with successful track records, performance and value creation.
Schlumberger and Cameron put the acquisition’s total value at $14.8 billion.
Cameron shareholders will own approximately 10% of Schlumberger’s outstanding shares of common stock.
Under the proposed deal, Cameron investors will receive $14.44 billion in cash and 0.176 unit of Schlumberger stock for every Cameron share they own.
Paris-based Schlumberger said it anticipates pretax synergies of about $300 million in the first year and $600 million in the second year after the deal closes.
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Goldman, Sachs & Co.is acting as financial advisor, and Baker Botts LLP and Gibson Dunn & Crutcher LLP are serving as legal counsel, to Schlumberger. Cameron’s financial adviser is Credit Suisse and Cravath, Swaine & Moore LLP is its legal counsel.
