Schlumberger Ltd. (NYSE: SLB) and Cameron International Corp. (NYSE: CAM) made waves in the market on Wednesday after coming to terms with a merger agreement. The companies announced a definitive merger agreement in a stock and cash transaction. The agreement was unanimously approved by the both boards of directors.
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, valuing the total offering at $12.7 billion. Upon closing, Cameron shareholders will own approximately 10% of Schlumberger’s outstanding shares of common stock.
This transaction is still subject to regulatory approval, as well as the approval from Cameron shareholders. The transaction is expected to close in the first quarter of 2016.
Paal Kibsgaard, chairman and CEO of Schlumberger, said:
This agreement with Cameron opens new and broader opportunities for Schlumberger. At our investor conference in June 2014, we highlighted how the E&P industry must transform to deliver increased performance at a time of range-bound commodity prices. 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.
In addition, we will achieve significant efficiency gains through lowering operating costs, streamlining supply chains, and improving manufacturing processes while leveraging the Schlumberger transformation platform. We look forward to welcoming the talented employees of Cameron and are pleased that they will be joining the Schlumberger team as our fourth product group.
Jack Moore, chairman and CEO of Cameron, added:
This exciting transaction builds on our successful partnership with Schlumberger on OneSubsea and will position Cameron for its next phase of growth. For our shareholders, this combination provides significant value, while also enabling them to own a meaningful share of Schlumberger. Together, we will create a premier oilfield equipment and service company with an integrated and expanded platform to drive accelerated growth.
Shares of Schlumberger were down 4.4% at $69.69 on Wednesday morning. The stock has a consensus analyst price target of $101.19 and a 52-week trading range of $68.01 to $112.00.
Cameron shares were up 41.4%, at $60.05 in its 52-week trading range of $39.52 to $74.89. The stock has a consensus analyst price target of $59.32.