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Thursday, August 27, 2015
Schlumberger Ltd. and Cameron are merging. The two firms jointly announced a definitive merger agreement in which the pair will combine in a stock and cash transaction. The agreement was unanimously approved by the boards of directors of both companies.
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. The terms represent a 37% premium to Cameron’s 20-day volume weighted average price of $48.24, and a 56.3% premium to its most recent closing stock $42.47 per share.
Upon closing, Cameron shareholders will own approximately 10% of Schlumberger’s outstanding shares of common stock.
Schlumberger expects to realize pretax synergies of approximately $300 million and $600 million in the first and second year, respectively. Initially, the synergies are primarily related to reducing operating costs, streamlining supply chains, and improving manufacturing processes, with a growing component of revenue synergies in the second year and beyond.
Schlumberger also expects the combination to be accretive to earnings per share by the end of the first year after closing.
The transaction is subject to Cameron shareholders’ approval, regulatory approvals, and other customary closing conditions. It is anticipated that the closing of the transaction will occur in the first quarter of 2016.
Goldman, Sachs & Co. is acting as financial advisor, and Baker Botts LLP and Gibson Dunn & Crutcher LLP are serving as legal counsel, to Schlumberger. Credit Suisse is acting as financial advisor and Cravath, Swaine & Moore LLP is serving as legal counsel to Cameron.
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