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Oilfield support services titan Schlumberger (NYSE:SLB) is to acquire energy equipment maker Cameron International (NYSE:CAM) for US$14.8bn.
Under the terms of the agreed bid, Cameron shareholders will receive 0.716 shares of Schlumberger common stock and a cash payment of US$14.44 in exchange for each Cameron share.
A back of the envelope calculation indicates the terms are worth US$68.36 per Cameron share. a 56.3% premium to Tuesday night's closing price for Cameron,
Schlumberger reckons there will be US$300mln of pre-tax cost savings to be extracted from a merger of the companies in the first year of the union, and added that the merger is expected to enhance Schlumberger's earnings in the first year of ownership.
In the second year, Schlumberger expects to realize around US$600s of savings from synergies.
“This agreement with Cameron opens new and broader opportunities for Schlumberger," said Paarl Disregard, chairman and chief executive officer of Schlumberger.
“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," he added.
The decision has put noses out of joint at shareholder rights law firm Johnson & Weaver - or maybe it is just touting for business - as the firm has launched an investigation into whether the board members of Cameron adequately explored alternatives to an agreed takeover.
The firm cited one analyst's share price target of US$76 a share for Cameron as an indication that the board of Cameron may have left money on the table.
Shares in Cameron closed at US$42.45 on Tuesday night and were trading at around US$61.40 in pre-market trading.AClo