American oilfield services giant SLB (NYSE:SLB) has announced a deal worth approximately $7.75 billion in stock to buy smaller rival ChampionX (NYSE:CHX).
The deal is the latest in a series of consolidations in the North American energy sector, and follows SLB’s acquisition of Norway’s Aker Carbon Capture last week. ChampionX itself merged with Apergy in 2020.
SLB said under the terms of the all-stock transaction, ChampionX shareholders will receive 0.735 shares of SLB common stock in exchange for each ChampionX share.
After the transaction closes, SLB said ChampionX shareholders will own approximately 9% of its outstanding shares of common stock.
SLB said its acquisition of ChampionX comes at “an important time in the industry”, pointing to growing demand for emerging technologies such as artificial intelligence and autonomous operations.
SLB chief executive officer Olivier Le Peuch said the acquisition will expand SLB’s presence in the “less cyclical and growing production and recovery space”.
“The combination of ChampionX’s strong production-focused leadership throughout North America and beyond with our own international presence, unmatched technology portfolio, and history of innovation will drive tremendous value for our customers and stakeholders,” he said.
© Shutterstock / Novikov Aleksey“Our core strategy remains centred on meeting growing energy demand while accelerating decarbonization and emissions reduction through innovation, scale and digitalization in our core oil and gas business.”
Start of ‘exciting next chapter’ for ChampionX
ChampionX president and chief executive officer Soma Somasundaram said today’s announcement marks the start of an “exciting next chapter” for the company.
“Becoming part of SLB will give us a much broader portfolio and the resources and reach to continue to lead the industry in providing energy to the world in an economically and environmentally sustainable way,” he said.
Mr Somasundaram said he is confident ChampionX employees will benefit from “greater opportunities as part of a larger organisation”.
Meanwhile, the deal will provide “compelling value creation” and “accelerated growth opportunities” for ChampionX shareholders, he said.
SLB said it expects to realize “annual pretax synergies of approximately $400 million” within the first three years post-closing through revenue growth and cost savings.
While the deal received unanimous approval from ChampionX’s board of directors, the transaction is subject to shareholder and regulatory approvals.
SLB said it anticipates transaction will close before the end of 2024.
In addition, SLB also announced it will return $7 billion to its shareholders over the next two years, with a target of $3 billion in 2024 and $4 billion in 2025.
“This commitment to our shareholders for 2024 and 2025 highlights our confidence in the value this transaction will create and in our ability to continue generating strong cash flow from our broader portfolio this year and next,” Mr Le Peuch said.
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