Schlumberger Ltd., the world’s largest oilfield-services provider, agreed to buy Cameron International Corp. for $66.36 a share in a $14.8 billion deal that creates greater one-stop shopping for crude explorers.
Cameron stockholders will receive 0.716 Schlumberger shares and a cash payment of $14.44 in exchange for each Cameron share, according to a regulatory statement on Wednesday. That’s a 56 percent premium to Cameron’s share price.
The deal combines Schlumberger, a service provider whose engineers help explorers drill and complete wells, with Cameron, which provides essential gear including pumps and blowout preventers, potentially allowing customers to shave costs through bundling. The slump in oil prices over the past year has forced oil companies to cut back on costly exploration and investment projects, impacting the services industry which caters to them.
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“This is a sign that Schlumberger sees a market bottom,” Matt Marietta, a Houston-based analyst or Stephens Inc. who rates the stock a buy and owns none, said today in a telephone interview. “Schlumberger didn’t have to agree to it this week. They could have waited for things to worsen. It can probably bring some confidence back to energy investors that we are approaching a bottom.”
The deal was announced before the start of regular trading in New York. Schlumberger fell 3.4 percent to $70.08 at 7:27 a.m. in New York, while Cameron climbed 44 percent to $61.25 7:29 a.m.
The deal is expected to be accretive to Schlumberger earnings per share in the first year after closing while they see a combined $900 million in synergies in the first two years, according to the statement.
“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,” Paal Kibsgaard, chairman and chief executive officer of Schlumberger, said in the statement. “This agreement with Cameron opens new and broader opportunities for Schlumberger.”
The deal follows the proposed merger between the world’s second- and third-largest oilfield services providers Halliburton Co. and Baker Hughes Inc. in a deal valued at near $35 billion when it was announced in November.
The Cameron purchase is diversification into oilfield equipment supply rather than consolidation of a rival service company so it is unlikely to face an anti-trust challenge, Marietta said.
The companies had been partners in a joint venture they created in 2012 called OneSubsea, combining Schlumberger’s reservoir expertise with with Cameron’s manufacturing of gear in the next generation of wells more than two miles under water.
“They must feel that there is definitely an opportunity there,” Alain Parent, an analyst at Natixis SA said by telephone. They want to go one step further after the joint venture.’’
Shares of European oil-services companies rose, with Aker Solutions ASA up 11 percent and CGG SA gaining as much as 9.7 percent.
Goldman, Sachs & Co. is acting as financial adviser, and Baker Botts LLP and Gibson Dunn & Crutcher LLP are serving as legal counsel, to Schlumberger. Credit Suisse is acting as financial adviser and Cravath, Swaine & Moore LLP is serving as legal counsel to Cameron.
--With assistance from Jim Polson in New York.