Wedding Season in Energy OFS: Schlumberger's Proposed Acquisition of Cameron International Following Halliburton's Pending Deal with Baker Hughes
Cameron International’s shareholder reaction
On August 26, 2015, Schlumberger (SLB) and Cameron International Corporation (CAM) reached a definitive agreement to merge in a stock-and-cash transaction. The agreement received approval from both companies’ boards of directors.
But the transaction is yet be approved by Cameron International’s shareholders, and the Schlumberger-Cameron deal still faces a number of regulatory approvals.
As the chart above shows, Cameron International’s shareholders have been excited about Schlumberger’s offer.
On August 26, 2015, the day agreement was reached, Cameron International’s share price rose by 41.1% from the August 25 closing price. Its share price continued to move up by another 5% on the following day. Overall, from August 21 to August 27, shareholders saw a 40% growth in wealth holding Cameron shares.
Schlumberger’s shareholder reaction
Although initially lukewarm to the transaction, Schlumberger’s shareholders turned upbeat after the details of the transaction came out.
On August 26, the day the agreement was reached, Schlumberger’s share price went down by 3.4%, but on August 27, it rose by 5.4% from the previous day’s close. From August 21 to August 27, Schlumberger’s shares declined by 5%.
Together, Schlumberger and Cameron account for 0.62% of the SPDR S&P 500 ETF (SPY).
These market reactions may reflect the market’s initial perception that Schlumberger might have overpaid in the deal. Shareholders may also be troubled by the fact that the similar deal between Halliburton Company and Baker Hughes, signed on November 17, 2014, has not yet gone through successfully. The Halliburton-Baker Hughes transaction was originally anticipated to close by 2Q15.
Other oilfield service companies’ shares
From August 21 to August 27, 2015, Weatherford International’s (WFT) shares increased by 15%, while National Oilwell Varco’s (NOV) share surged by 11%.
In the next part of this series, we’ll discuss what the Schlumberger-Cameron International deal would mean for revenues and profits.
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