Tags: Cameron | Schlumberger | oilfield | merger

Schlumberger to Buy Oilfield Gear Maker Cameron in $14.8 Billion Deal

Wednesday, 26 Aug 2015 09:24 AM

Oilfield services company Schlumberger Ltd. agreed to buy Cameron International Corp., which makes equipment used by oilfield services providers, in a deal valued at $14.8 billion to cut costs amid weak drilling activity.

Cameron makes products, such as blowout preventers and valves, that control pressure at oil and gas drill sites. Schlumberger provides oil and gas producers with a full array of services from surveying a site to drilling and completing wells.

The two companies had combined their subsea businesses in November 2012 to create a joint venture to drill in deeper waters.

Besides cutting operating costs, the acquisition will also help Schlumberger streamline its supply chains and improve its manufacturing processes, Chief Executive Paal Kibsgaard said in a statement.

The cash-and-stock offer values Cameron at $66.36 per share, a premium of 56.3 percent to Cameron's Tuesday close.

Cameron's shares shot up to $62.50 in premarket trading on Wednesday. Schlumberger's shares fell 1.4 percent to $71.50.

Oil prices have tumbled 60 percent since June last year, forcing oil and gas producers to cut back on exploration activity, which in turn has hurt demand for oilfield services.

Schlumberger has slashed 20,000 jobs this year alone and lowered its capital budget in an effort to maintain margins.

Schlumberger's rivals Halliburton Co and Baker Hughes Inc agreed in November to merge in an effort to contain costs. The deal, which will create a company with 2013 pro-forma revenue of $51.8 billion, is yet to get all required regulatory approvals.

Schlumberger and Cameron's combined pro-forma revenue would have been $59 billion in 2014, Schlumberger said.

Schlumberger's offer values Cameron at $12.74 billion, based on the company's diluted shares as of June 30.

Cameron shareholders will get $14.44 in cash and 0.716 of a Schlumberger share for each share held.

Schlumberger said it expects the deal to add to earnings by the end of the first year after closing, which is expected in the first quarter of 2016.

Goldman Sachs & Co. is Schlumberger's financial adviser and Baker Botts LLP and Gibson Dunn & Crutcher LLP are its legal counsel. Cameron's financial adviser is Credit Suisse and Cravath, Swaine & Moore LLP is its legal counsel.

© 2017 Thomson/Reuters. All rights reserved.

 
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Oilfield services company Schlumberger Ltd. agreed to buy Cameron International Corp., which makes equipment used by oilfield services providers, in a deal valued at $14.8 billion to cut costs amid weak drilling activity.
Cameron, Schlumberger, oilfield, merger
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2015-24-26
Wednesday, 26 Aug 2015 09:24 AM
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