Schlumberger Ltd. (SLB) will acquire Smith International (SII) for about $11 billion in an all stock deal that is the year's largest acquisition and will make Schlumberger by far the world's biggest oilfield services company.
The deal, which the companies announced Sunday, will cement Schlumberger's position atop the oil services industry, which helps oil producers locate and drill for oil deposits. After the deal, Schlumberger, already the biggest company in the sector by revenue and market value, would have revenues double that of its nearest rival, Halliburton Co. (HAL), although most analysts expect Schlumberger to sell some assets for antitrust or other reasons.
Under the terms of the deal, Smith shareholders will receive 0.6966 Schlumberger share for each Smith share they own, a 37.5% premium over Smith's share price on Thursday, when news of the deal was first reported. The deal, which must still be approved by shareholders of both companies, is expected to close in the second half of this year. Smith shareholders would own about 12.8% of the combined company.
The $11 billion price tag, which values Smith at $44.51 per share based on Friday's close, was higher than most analysts expected. Dan Pickering, an analyst for energy focused investment bank Tudor Pickering Holt & Co., said some Schlumberger shareholders might also have preferred a cash and stock deal to an all stock deal. But he said the deal makes sense for Schlumberger, which will now be able to package Smith's products with its own services to win more business.
Get 4 FREE Trade School Videos from INO TV!
Share
No comments:
Post a Comment