Houston – The french largest oilfield services company, Schlumberger Limited (NYSE: SLB) and Cameron International Corporation (NYSE: CAM), the global provider of pressure control, processing, flow control and compression systems, announced a partnership in which both companies combine stock and cash transactions. The board of directors of both companies approved the agreement. The information was released this Wednesday.
Schlumberger valued Cameron at $14.8 billions. Cameron will join oilfield services company as its fourth product group and Scott Rowe, Cameron’s president and chief operating officer will be the frontman of the operation.
Terms of the agreement
On Cameron’s side, shareholders are going to receive 0.716 shares of Schlumberger common stock and $14.44 cash payment in exchange for each share of Cameron. According to the latest closing stock prices of both companies, the agreement places a value of $66.36 per Cameron share. Upon closing, Cameron shareholders will get the nearly 10 percent of Schlumberger’s premium shares of common stock. On the other side, Schlumberger expect in the first and second year to realize pretax cooperation of both companies of about $300 and $600 millions to each of them.
Expectations of the merger
Furthermore, the synergies will correspond with reducing operating costs, effective supply chains and improve the manufacturing processes and a rising component of profit synergies in the second year and beyond. The oilfield services company also expects the combination to be accretive to earnings per share by the end of the first year after closing. Schlumberger believes this agreement will open new and broader opportunities for the company.
“This exciting transaction builds on our successful partnership with Schlumberger on OneSubsea and will position Cameron of 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.” said Jack Moore, Cameron Chairman and CEO.
The closing of the transaction is expected to occur in the first quarter of 2016. Meanwhile, the transaction is subject to Cameron shareholder’s approval, regulatory approvals and other customary closing conditions.