Schlumberger To Acquire Cameron In $14.8 Bln Cash, Stock Deal

(RTTNews) - Oilfield services provider Schlumberger Ltd (SLB) and Cameron International Corp. (CAM) Wednesday announced a definitive merger agreement worth $66.36 per Cameron share, in a stock and cash transaction carrying total value of $14.8 billion.

Schlumberger expects the combination to be accretive to earnings per share by the end of the first year after closing. The deal is expected to close in the first quarter of 2016.

Cameron provides flow equipment products, systems and services to worldwide oil and gas industries. Its shareholders will receive 0.716 shares of Schlumberger common stock and a cash payment of $14.44 in exchange for each Cameron share. The agreement was unanimously approved by the boards of directors of both companies.

The offer marks a 56.3 percent premium to Cameron's most recent closing stock price of $42.47 per share. Upon closing, Cameron shareholders will own about 10 percent of Schlumberger's outstanding shares of common stock.

Schlumberger expects to realize pretax synergies of $300 million in the first year and $600 million in the second year. Initially, the synergies are primarily related to reducing operating costs, streamlining supply chains, and improving manufacturing processes. There is a growing component of revenue synergies in the second year and beyond.

The transaction combines two complementary technology portfolios into a "pore-to-pipeline" products and services offering to the global oil and gas industry. On a pro forma basis, the combined company had 2014 revenues of $59 billion.

Paal Kibsgaard, chairman and CEO of Schlumberger, said, "This agreement with Cameron opens new and broader opportunities for Schlumberger...With oil prices now at lower levels, oilfield services companies that deliver innovative technology and greater integration while improving efficiency, which our customers increasingly demand, will outperform the market."

Kibsgaard believes 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.

SLB, which closed down 1.8 percent on Tuesday at $72.51, fell 3.5 percent in pre-market activity.

CAM, which settled down 1 percent at $42.45, surged 44.6 percent in pre-market activity.