The UK Competition Market Authority (CMA) has launched an inquiry into a merger of two subsea geological survey firms.
Under the terms of the merger, Petroleum Geo-Services, or PGS, will be acquired by fellow firm TGS under an all-share transaction worth around $860 million.
The merging of PGS (OSE:PGS) and TGS (OSE:TGS) is a joint stock exchange and it set to form the “premier energy data company,” according to the latter company.
Both of the parties involved carry extensive data on North Sea oil and gas and wind developments and are considered heavy hitters in their field.
The deadline for the CMA to announce its clearance of the merging of PGS and TGS is currently set for 11 June this year.
However, the watchdog has said that it “cannot guarantee that the decision will be announced on or before this current deadline, as the deadline of a given case may change during the merger assessment process due to different reasons.”
We’ve launched our investigation into the merger of TGS and PGS and the possible impact on competition within the UK for seismic data. #energy
Read more: https://t.co/pejbKBrJ3v pic.twitter.com/ikjsZq7Saz
— Competition & Markets Authority (@CMAgovUK) April 12, 2024
The CMA launched a merger inquiry on 12 April, after deciding to pursue the case following a ‘Phase 1’ decision.
The watchdog decided to pursue under suspicion that the deal “meets the requirements of section 96(2)” of the Enterprise Act 2002
The CMA has said: “We’ve launched our investigation into the merger of TGS and PGS and the possible impact on competition within the UK for seismic data.”
The CMA has called for “any interested party” to come forward with information on the deal to help it along in its decision-making process.
Kristian Johansen, chief executive of TGS said: “We now look forward to receiving clearance also from the UK authorities in due course, and move towards completion of the merger.”
TGS and PGS ‘expect and work towards completion’
Despite uncertainty from UK regulators, both firms continue to “expect and work towards completion” of their merger which is set to occur during the second quarter of 2024.
The Norwegian Competition Authority has already signed off on the deal but UK authorities could stand in the way.
The deal will result in a combined company with a fully diluted market cap of around $2.6bn.
PGS is set to be taken over by TGS under an all-share transaction worth around $860 million.
This will see PGS shareholder granted a stake in TGS.
Rune Olav Pedersen, president and chief executive of PGS commented: “The Norwegian Competition Authorities decided in mid-February to assess the TGS-PGS merger transaction in a more detailed phase II review.
“Our impression is that they have done a thorough assessment, and we are pleased they have now approved the merger.”
Watchdog blocks North Sea helicopter merger
This is not the first time that the CMA has weighed in on a North Sea merger, as the Aberdeen-based helicopter operator CHC is all too familiar with.
Following an investigation CMA demanded that CHC sell the formerly Babcock-owned Offshore Helicopter Services UK.
This led to CHC selling off its newly acquired business to South Africa’s Ultimate Aviation Group early in 2023.
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