SLB (NYSE: SLB) and ChampionX Corporation (NASDAQ: CHX) yesterday announced a definitive agreement for SLB to purchase ChampionX in an all-stock transaction. The agreement was unanimously approved by the ChampionX board of directors.
Under the terms of the agreement, ChampionX shareholders will receive 0.735 shares of SLB common stock in exchange for each ChampionX share. At the closing of the transaction, ChampionX shareholders will own approximately 9% of SLB’s outstanding shares of common stock.
SLB’s acquisition of ChampionX comes at an important time in the industry. The production phase of oil and gas operations typically comprises the majority of an asset’s life cycle from completion through decommissioning. This places a premium on the service provider’s ability to help customers address challenges across the entirety of their production system. At the same time, there is a growing demand to scale emerging technologies such as AI and autonomous operations across global operations.
“Our customers are seeking to maximize their assets while improving efficiency in the production and reservoir recovery phase of their operations,” Olivier Le Peuch, SLB’s chief executive officer, said. “This presents a significant opportunity for service providers who can partner with customers throughout the entire production lifecycle, offering integrated solutions and delivering differentiated value. The combination of ChampionX’s strong production-focused leadership throughout North America and beyond with our international presence, unmatched technology portfolio, and history of innovation will drive tremendous value for our customers and stakeholders.
“Our core strategy remains centred on meeting growing energy demand while accelerating decarbonization and emissions reduction through innovation, scale and digitalization in our core oil and gas business. This acquisition will expand SLB’s presence in the less cyclical and growing production and recovery space that is closely aligned with our returns-focused, capital-light strategy,“ Le Peuch said.
“Today’s announcement marks the start of an exciting next chapter for ChampionX,” Soma Somasundaram, president and CEO of ChampionX, said. “We have been on a journey to build the best production-focused company in our sector, to unlock energy through our differentiated products and technology as well as our strong financial engine. Becoming part of SLB will give us a much broader portfolio and the resources and reach to continue to lead the industry in providing energy to the world in an economically and environmentally sustainable way. Our companies share a vision for the future of energy that leverages technology and innovation to solve our customers’ most complex problems and better serve the communities in which we operate.
“As I look ahead, I am confident that our talented employees will benefit from greater opportunities as part of a larger organization. For our shareholders, the combination provides compelling value creation and the opportunity to share in significant upside from the realization of synergies, including accelerated growth opportunities given the complementary nature of the respective portfolios. I have long admired SLB’s focus on technology and innovation, as well as its global reach, and throughout our engagement with them, I have also been impressed with their commitment to preserving and capitalizing on all that has made ChampionX successful. Finally, I want to thank our employees for their continued commitment to our purpose of improving lives,” Somasundaram said.
SLB expects to realize annual pretax synergies of approximately $400 million within the first three years post-closing through revenue growth and cost savings. The transaction is subject to ChampionX shareholders’ approval, regulatory approvals and other customary closing conditions. It is anticipated that the closing of the transaction will occur before the end of 2024.
SLB also announced today that it will return $7 billion to shareholders over the next two years. SLB will increase its 2024 shareholder returns to a target of $3 billion as well as set a target for 2025 shareholder returns of $4 billion. “This commitment to our shareholders for 2024 and 2025 highlights our confidence in the value this transaction will create and, in our ability, to continue generating strong cash flow from our broader portfolio this year and next,” Le Peuch said.
