Tue, Nov. 8, 2:48 PM
- It's time to buy Baker Hughes (BHI -0.2%) now that the dust has settled regarding the company's merger with General Electric's (GE +0.6%) oil and gas business, Guggenheim analysts say.
- Guggenheim estimates the new company will generate $4.9B in EBITDA in 2018 - a bit less than the $5.2B-$5.5B forecast by the companies - and should trade at a peer average 10.6x EBITDA, implying a fair value for BHI of ~$63, but the firm believes synergies provide another ~$4 of upside if GE is able to realize greater cost savings.
- The firm also finds the industrial logic is sound: As Schlumberger (SLB -0.1%) has shown, regional and product line diversity enhance through-cycle returns and cash flow, which are benefits that the new BHI should be able to realize as a result of its pro forma portfolio.
Mon, Oct. 31, 10:30 AM
- Baker Hughes (BHI -1%) erases opening gains to trade in the red, while General Electric (GE +0.9%) is higher amid plans to combine their oil and gas operations.
- The new company will be 62.5% owned by GE, with GE Oil & Gas CEO Lorenzo Simonelli serving as President and CEO; GE will fund a special one-time cash dividend of $17.50/share, or $7.4B, to existing BHI shareholders, who will own 37.5% of the new company.
- The deal creates a company with more than $32B in FY 2015 revenue that could cut costs to better compete with rivals such as Schlumberger (SLB -0.9%) to provide equipment and services to oil rigs and wells; the $32B combined revenue places the new company only 8%-9% behind SLB.
- The combined companies expect to generate $1.6B of synergies by 2020, primarily driven by cost savings; GE expects the deal to be accretive to 2018 EPS by $0.04 and 2020 EPS by $0.08.
- Analysts see a high likelihood of the deal's completion given little product overlap outside of the Artificial Lift business and the relatively smaller size of the deal vs. the rejected Halliburton-Baker Hughes (HAL -0.5%) tie-up.
- Moody’s, Fitch and S&P all affirmed GE’s credit ratings with stable outlooks following the announcement.
Mon, Oct. 31, 6:25 AM
- Banking on a recovery in crude prices, General Electric (NYSE:GE) is merging its oil and gas business with Baker Hughes (NYSE:BHI), creating a large, listed player, that could compete with rivals like Schlumberger (NYSE:SLB).
- GE will own 62.5% of the new company, which will have combined revenue of $32B, while Baker Hughes shareholders will own 37.5% and get a special one-time cash dividend of $17.50 per share after the deal closes (expected in mid-2017).
- GE +1%; BHI +6.6% premarket
Sun, Oct. 30, 10:50 PM
- The roughly $30B deal would see the creation of a new publicly-traded entity comprised of Baker Hughes (NYSE:BHI), GE's oil and gas business, and some cash from GE, reports the WSJ.
- The new company would have more than $25B in annual revenue and thus be of large enough scale to better compete with rivals like Schlumberger (NYSE:SLB).
- The structure of the deal also gives GE control of Baker Hughes without having to shell out for an outright acquisition.
- Previously: WSJ: GE, Baker Hughes could reach deal as soon as next week (Oct. 28)
Mon, Mar. 28, 7:59 AM
- Schlumberger’s (NYSE:SLB) $12B takeover of Cameron International (NYSE:CAM) is set to close April 1 after the Chinese Ministry of Commerce cleared the proposed merger without any conditions.
- China's approval was the last major closing condition to the merger; the U.S. Justice Department signed off on the deal in November, finding that it did not violate antitrust laws.
- CAM says it is remaining neutral toward SLB's offer to purchase up to $1.2B in aggregate principal amount of CAM's outstanding senior notes in a tender offer in connection with the merger.
Fri, Feb. 5, 7:49 AM
- The European Union approves Schlumberger's (NYSE:SLB) pending acquisition of Cameron International (NYSE:CAM), saying it had no major competition concerns.
- The EU says CAM's and SLB's activities present limited overlaps in the markets of produced water treatment and on the drilling chokes market, and that the deal would raise no competition concerns, "given the very limited overlaps between the companies' activities and the modest increment in market shares brought about by the transaction."
Mon, Jan. 25, 8:08 AM
- Schlumberger (NYSE:SLB) is set to gain unconditional approval from the European Union for its $14.8B takeover of equipment maker Cameron International (NYSE:CAM), Reuters reports.
- Antitrust experts have predicted that the deal would draw minimum scrutiny since the companies offer complementary product lines, while Halliburton's (NYSE:HAL) proposed $35B offer for Baker Hughes (NYSE:BHI) would face a tougher time because of concerns it could push up prices for oil and gas exploration in Europe.
- U.S. antitrust regulators cleared the deal without conditions last November.
Dec. 17, 2015, 3:52 PM
- Cameron (CAM -1.9%) shareholders easily approve Schlumberger's (SLB -2.3%) takeover of the company in a deal worth ~$12.7B, paving the way for the transaction to close early next year.
- The U.S. Department of Justice cleared the deal last month without conditions, but the companies still await regulatory approval from the European Commission as well as other jurisdictions that have not been publicly identified in documents.
- Once finalized, CAM shareholders will receive 0.716 SLB shares for every share of CAM plus $14.44 in cash.
Nov. 17, 2015, 6:30 PM
- Schlumberger’s (NYSE:SLB) proposed purchase of Cameron International (NYSE:CAM) is cleared by the U.S. Justice Department, putting the companies on track to close the deal early next year.
- The DoJ found that the transaction did not violate antitrust laws, and cleared the proposed merger without any conditions, the companies said.
- CAM shareholders still must sign off on the deal, and are expected to vote in a special meeting on Dec. 17; approval is not needed from SLB’s shareholders.
Sep. 24, 2015, 12:15 PM
- Schlumberger (SLB +0.3%) says it will not extend its pending agreement to acquire a minority equity interest in Eurasia Drilling once the current extension expires on Sept. 30.
- SLB had wanted to buy a 45.65% stake in Eurasia for ~$1.7B, potentially paving the way for it to become the sole owner of Russia's most active oilfield services company.
- The deal initially was endorsed by Russia's anti-monopoly body but it has since been postponed several times.
Sep. 4, 2015, 12:23 PM
- Sclumberger’s (NYSE:SLB) purchase of Cameron International (NYSE:CAM) should easily close, with optimism growing that Halliburton's (NYSE:HAL) bid for Baker Hughes (NYSE:BHI) also will close, and the deals mean more oil company M&A is on the way, FBR Capital analyst Thomas Curran believes.
- The wave of heavyweight deals likely is not over yet, Curran says, seeing Weatherford (NYSE:WFT) as the highest probability takeout with the broadest set of plausible strategic suitors; National Oilwell Varco (NYSE:NOV) is viewed as having a high likelihood of entering into a big deal, although probably as an acquirer, and FMC Tech (NYSE:FTI) could puruse a full combination with Technip, its 50/50% JV partner in Forsys Subsea.
Aug. 28, 2015, 2:56 PM
- Schlumberger (SLB +2.7%) is offering more than $66 in cash and stock per share while takeover target Cameron International’s (CAM +2.5%) private market value may be only $63, according to Gabelli analysts who lower their recommendation on CAM to Hold from Buy.
- The firm says arbitrageurs can earn a respectable ~10% annualized return on the deal, assuming a successful close by the end of Q1 2016 and given the current $3.62 deal spread.
- However, the firm believes the deal makes strategic sense for both companies, combining SLB’s subsurface and wellbore expertise with the largest surface technology and second-largest subsea equipment manufacturer, and expects the deal will close with minimal regulatory scrutiny.
Aug. 28, 2015, 11:29 AM
- Traders willing to bet Halliburton's (HAL +1.4%) proposed deal for Baker Hughes (BHI +1.2%) can survive regulatory scrutiny stand to amass more than $3B in profit, and Schlumberger’s (SLB +1.9%) purchase of Cameron International (CAM +1.7%) could help their chances, according to a Bloomberg analysis.
- With SLB - already the world’s largest oilfield-services provider - getting even bigger, HAL and BHI could have a better argument that they need to merge to get stronger, and the deal could provide more incentive for contractors to bid on HAL and BHI assets as they seek to stay competitive; HAL and BHI have committed to divest as much as $7.5B in assets, and several buyers appear to be interested.
- HAL shares stand to drop sharply without a deal, it would not have the merger’s cost-cutting opportunities to shield it from the slump in oil prices and shrinking revenue, and it would have to pay a $3.5B breakup fee if the deal fails to gain regulatory approval.
Aug. 26, 2015, 3:25 PM
- Analysts say Schlumberger’s (SLB -4.2%) acquisition of Cameron International (CAM +41.7%) is not particularly surprising, given SLB's two years of experience working alongside CAM through their OneSubsea joint venture and track record of soaking up JV partners.
- The combination effectively allows the two companies to extract the type of cost savings found at OneSubsea across the rest of their businesses; SLB thinks it can find pretax benefits of $600M in the second year after the deal, most of which will come from cost-cutting.
- Citigroup says the deal will firmly establish SLB as the dominant and most diversified oilfield service provider, with total estimated revenues for the combined entity of $46B in 2015, a figure the prospective Halliburton (HAL +2.3%) and Baker Hughes (BHI +2.5%) combo cannot match.
- SLB is making a strategic bet on a recovery in deepwater drilling, even if not in 2016, Tudor Pickering says; with 7M-plus bbl/day of global oil production coming from deepwater reservoirs, it makes sense that offshore activity eventually will rebound.
- The deal is not likely to touch off an M&A wave in the oilfield services industry because the global crude slump has strained the finances of many companies, leaving few able to make such a move, says Edward Jones analyst Rob Desai.
- But several potential acquisition targets in the services industry are higher: OII +8.3%, DRQ +7.4%, FTI +6.5%, NOV +4.1%, FET +3%.
Aug. 26, 2015, 6:32 AM
- Schlumberger (NYSE:SLB) is acquiring oilfield equipment maker Cameron International (NYSE:CAM) in a stock and cash transaction valued at $14.8B.
- Under the terms of the agreement, Cameron shareholders will receive 0.716 shares of Schlumberger common stock and a cash payment of $14.44 for each share held.
- The deal represents a 56.3% premium to Cameron's closing stock price on Tuesday.
- CAM +41.4% premarket
Jan. 20, 2015, 11:49 AM
- The timing for Schlumberger’s (SLB -0.7%) acquisition of 45.6% in Russia’s largest drilling company is considered unusual, given the sanctions imposed on Russia, but Eurasia's shares have fallen by more than 60% over the past year after top customers Lukoil and Gazprom came under sanctions.
- The move signals that SLB is “taking an opportunity to strengthen its presence in the regional market,” the Otrkitie brokerage says, adding that it views the $22/share valuation of the deal as fair.
- SLB stock price targets are cut at several firms, including Argus and Jefferies, to reflect expectations for reduced spending by E&P customers, although the company generally is seen as well positioned in 2015 despite current industry headwinds.