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Basics of the Schlumberger-Cameron Transaction

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Basics of the transaction

As we saw in the first part of this series, Schlumberger (SLB) is buying Cameron (CAM) for a combination of cash and stock. The total transaction value is close to $15 billion.

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Management comments on the transaction

Paal Kibsgaard, chairman and chief executive officer of Schlumberger, asserted that the deal with Cameron would open new opportunities for Schlumberger. “At our investor conference in June 2014,” he stated, “we highlighted how the E&P industry must transform to deliver increased performance at a time of range-bound commodity prices. With oil prices now at lower levels, oilfield services companies that deliver innovative technology and greater integration while improving efficiency, which our customers increasingly demand, will outperform the market.”

Kibsgaard further explained, “We believe that the next industry technical breakthrough will be achieved through integration of Schlumberger’s reservoir and well technologies with Cameron’s leadership in surface, drilling, processing and flow control technologies. Deep reservoir knowledge further enabled by instrumentation, software and automation, will launch a new era of complete drilling and production system performance.”

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Conditions precedent

The following conditions need to be satisfied in order for the deal to close:

  • Cameron shareholder vote
  • U.S. Securities and Exchange Commission approval of the proxy statement
  • Hart–Scott–Rodino Antitrust Improvements Act filing
  • European Union antitrust approval
  • Other applicable foreign regulatory approvals

Non-solicitation agreement and breakup fee

Cameron has a non-solicitation agreement with a fiduciary-out provision. This means that prior to shareholder approval of the transaction, Cameron could discuss a merger with another interested suitor. If a bidder happens to come in and top the Schlumberger bid, Cameron will owe Schlumberger a breakup fee of $321 million.

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