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The oilfield services giant Schlumberger has announced that it is to acquire oilfield technology expert Smith International in an all stock deal worth US$11.34 billion.
In a statement released to the press the company said Smith shareholders will receive 0.6966 shares of Schlumberger in exchange for each Smith share. The deal places a value of $45.84 per Smith share, representing a 37.5% premium.
“At our investor event in September 2008, we highlighted that increased levels of drilling are required to sustain and increase world oil and gas production. Increasingly, those wells are being drilled in more challenging environments and in new resource plays, with longer and more complex profiles,” Andrew Gould, chairman and CEO of Schlumberger said.
“Schlumberger is already the leader in the measurement and steering technologies that are necessary to drill these profiles.”
“We firmly believe, however, that the next breakthrough will be through engineered drilling systems that optimize all the components of the drillstring, allowing our customers to drill more economically in demanding conditions,” he added.
Gould also said that “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”.
While Gould believes that the companies complement each other the deal is still expected to be scrutinised by anti-trust enforcers in the US. However, it is believed that neither company expects to sell any assets to allow the acquisition to proceed.
Schlumberger are already the world’s largest oilfield services company and, based on the 2009 revenues of each company, the deal will see the Paris and Houston-based company rake in double the revenues of Halliburton, its nearest rival.