SLB, the world's top oilfield services provider, announced on Tuesday a definitive agreement to buy smaller competitor ChampionX Corporation in an all-stock deal valued at $7.75 billion, as the energy sector consolidation extends to the oilfield services segment.
SLB and ChampionX announced the agreement whose terms stipulate that ChampionX shareholders will receive 0.735 shares of SLB common stock in exchange for each ChampionX share. At the closing of the transaction ChampionX shareholders will own around 9% of SLB's outstanding shares of common stock.
After the deal was announced, ChampionX's shares jumped by 10% in pre-market trade on the NASDAQ.
The deal - subject to ChampionX shareholders' approval, regulatory approvals, and other customary closing conditions - is expected to close before the end of 2024.
"Our customers are seeking to maximize their assets while improving efficiency in the production and reservoir recovery phase of their operations," SLB's chief executive officer Olivier Le Peuch said, commenting on the deal.
"This presents a significant opportunity for service providers who can partner with customers throughout the entire production lifecycle, offering integrated solutions and delivering differentiated value," the executive added.
"Our core strategy remains centered on meeting growing energy demand while accelerating decarbonization and emissions reduction through innovation, scale and digitalization in our core oil and gas business," Le Peuch said.
SLB also said in the same statement today that it would return $7 billion to shareholders over the next two years. SLB will increase its 2024 shareholder returns to a target of $3 billion. The company also set a target for 2025 shareholder returns of $4 billion.
The deal involving the world's largest oilfield services provider follows a series of merger agreements in the upstream and midstream sectors in the United States. More than $100 billion worth of deals have been announced in recent months and analysts expect the consolidation to continue.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More
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