Schlumberger, the world’s largest oilfield services company, and fellow services firm Cameron, originator of the oilfield blowout preventer, said Wednesday they’re merging in a $14.8 billion cash and stock deal.
Under the terms of the agreement, Cameron shareholders will receive 0.716 shares of Schlumberger common stock and a cash payment of $14.44 in exchange for each Cameron share. Based on the closing stock prices of both companies on Aug. 25, the deal values Cameron at $66.36 per share – a 37% premium to Cameron’s 20-day volume weighted average price of $48.45/share, and a 56.3% premium to Cameron’s most recent closing stock price of $42.47/share.
Upon closing, Cameron shareholders will own roughly 10% of Schlumberger’s outstanding common shares, Kallanish calculates.
“We believe that the next industry technical breakthrough will be achieved through integration of Schlumberger’s reservoir and well technologies with Cameron’s leadership in surface, drilling, processing and flow control technologies,” said Paal Kibsgaard, CEO of Paris-based Schlumberger. “Deep reservoir knowledge further enabled by instrumentation, software and automation, will launch a new era of complete drilling and production system performance.”
Schlumberger projects pretax synergies of roughly $300 million and $600 million in the first and second year, respectively, initially related to reducing operating costs, streamlining supply chains, and improving manufacturing processes.
On a pro forma basis, the combined company had 2014 revenue of $59 billion.
“This is a merger of two good companies, two companies merging from a position of strength,” said Charles Cherington, managing partner and co-founder of Houston, Texas-based private equity firm Intervale Capital. Cherington, whose compnay holds no position in either firm, spoke Wednesday morning on CNBC’s “Squawk Box,” monitored by Kallanish.
“By bringing together Cameron and Schlumberger, we will be uniting two great companies with successful track records, performance and value creation,” said Jack Moore, CEO OF Houston-based Cameron.
The transaction is expected to close in the first quarter of 2016.
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