Schlumberger Limited. (NYSE:SLB) announced that it is acquiring Cameron International Corporation (NYSE:CAM) in a deal valued at $14.8 billion or $66.36 per share. Cameron shareholders will get 0.716 shares of Schlumberger and a cash payment of $14.44 in exchange for every share of Cameron. The deal represents a hefty premium of 56 percent to CAM’s stock closing price on Tuesday.
The sluggish oil prices over the last year compelled oil companies to cut costly exploration and postponed investment projects, which has affected the services industry that caters to them.
The deal was revealed before the commencement of regular trading today. Schlumberger shares dropped over 3 percent today following the news, while Cameron shares jumped more than 44 percent.
The transaction is anticipated to add to Schlumberger earnings in the first year following closing, whereas they are expecting combined synergies of $900 million in the initial two years, according to the two companies.
Chairman and CEO at Schlumberger, Paal Kibsgaard said that with lower levels of oil prices, oilfield services firms which offer greater integration and innovative technology while enhancing effectiveness, which Schlumberger’s customers demand, will outpace the market. The deal with Cameron will open new opportunities for Schlumberger, Kibsgaard added.
The transaction follows the proposed union between Halliburton Co., and Baker Hughes Inc. in a deal valued at roughly $35 billion when it was disclosed in November.
An analyst or Stephens Inc., Matt Marietta said that the Cameron acquisition is expansion into oilfield equipment supply instead of consolidation of a competitor service firm, thus there is very less chance of an antitrust challenge.
Goldman, Sachs & Co. is serving as a financial adviser, and Gibson Dunn & Crutcher and Baker Botts LLP are acting as legal counsel to Schlumberger (SLB). On the other hand, Credit Suisse is serving as financial adviser, while Cravath, Swaine & Moore LLP is acting as legal counsel to Cameron (CAM).
