Schlumberger to Buy Cameron: Another Big Deal in the Oil Patch
Regulatory approvals determine when the deal will close
With almost all mergers, the rate of return is driven by the time it takes to finalize the transaction. In the case of the Schlumberger-Cameron merger, several regulatory approvals are required to close the deal.
Antitrust requirement
To get over the first regulatory hurdle, Schlumberger will need to file under the Hart–Scott–Rodino Antitrust Improvements Act. Since Schlumberger is an oil services company and Cameron makes drilling equipment, there isn’t much (if any) overlap, so the antitrust review should be pro forma. That said, antitrust authorities occasionally take a closer look at mergers in industries they aren’t familiar with, and industries that have experienced previous antitrust issues. As Schlumberger has been cited for anti-competitive behavior in the past, the antitrust regulators will most likely want to ensure that Schlumberger isn’t tying equipment purchases to service contracts or doing anything that might restrict competition.
The deal will have to be filed with the EU antitrust authorities as well, but the Federal Trade Commission approval will probably be the toughest hurdle for the deal (and ultimately it should be approved).
Best efforts language
The companies will use reasonable best efforts to get regulatory approval, but they’re not required to make any concessions that would have a material effect on Cameron’s business. Given the lack of overlap, it is highly unlikely any divestitures would be required.
Other approvals
Cameron will have to get the proxy statement approved by the SEC (U.S. Securities and Exchange Commission). If the SEC makes any comments, the companies will need to fix the language and refile. Once the SEC approves the proxy statement, a vote must be scheduled at least 30 days from the mailing date.
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