Deal to double Schlumberger's revenue
By Elinor Comlay and Michael Erman |
February 23, 2010, Tuesday
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Print Edition
Print Edition
SCHLUMBERGER Ltd agreed to buy Smith International in an US$11.34 billion all-stock deal that will boost the oilfield services leader's revenue to double that of its nearest rival.
The deal, still subject to shareholder and regulatory approval, values Smith stock at US$45.84, a 37.5 percent premium over Thursday's closing price, said a joint statement by the firms on Sunday.
The acquisition is the latest in a string of oilfield services deals as the sector begins to recover. Profits had plummeted as oil and natural gas companies cut spending on projects when energy prices collapsed along with economic activity in 2008.
After the deal, Schlumberger's revenue would double that of nearest rival Halliburton Co, which had 2009 revenues of US$14.7 billion.
"Smith's drilling technologies, other products and expertise complement our own, while the geographical footprint of Schlumberger means we can extend our joint offerings worldwide," Andrew Gould, chief executive of Schlumberger, said in a statement.
Schlumberger said it expects the acquisition to add to earnings per share in 2012. The company also expects to realize pretax synergies after costs of about US$160 million in 2011 and about US$320 million in 2012.
Under the terms of the deal, Smith shareholders will receive 0.6966 share of Schlumberger for each Smith share. On closing, Smith shareholders will hold about 12.8 percent of Schlumberger's outstanding shares.
Analysts said antitrust regulators would look at the deal very closely.
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