Schlumberger, the world’s largest oilfield services company has kicked off the mergers and acquisitions season by announcing its purchase of Cameron, a globally recognized surface technology provider, for $14.8 billion. The news follows an announcement made last year of Halliburton (No.2 in oilfield services provision) deciding to buy Baker Hughes – the third-largest oilfield services provider – in November 2014.
As the Financial Times reported, Halliburton said this month it was providing the US and EU competition authorities with additional information on its planned acquisition of Baker Hughes, which involves significant product overlap and would give it a greater share in certain markets. It is aiming to close that deal by late this year, but acknowledges it could slip into 2016.
Schlumberger, No.1 in oilfield services, which posted net loss of $643 million in the first-quarter, cut 9,000 jobs in January and has already announced that it would cut up to additional 11,000 workers, has announced that the merger will allow it to generate about $300m in savings in the first year after the deal and $600m during the second. These would come from reducing operating costs, streamlining supply chains, and improving manufacturing processes.
Paal Kibsgaard, Chairman and Chief Executive Officer of Schlumberger remarked, “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.
“We believe that the next industry technical breakthrough will be achieved through integration of Schlumberger’s reservoir and well technologies with Cameron’s leadership in surface, drilling, processing and flow control technologies. Deep reservoir knowledge further enabled by instrumentation, software and automation, will launch a new era of complete drilling and production system performance.”
Jack Moore, Chairman and Chief Executive Officer 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.”
According to a statement issued by Schlumberger, upon closing, Cameron shareholders will own approximately 10% of Schlumberger’s outstanding shares of common stock.
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.
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