Schlumberger to buy oilfield gear maker Cameron in $14.8 billion deal

By Sneha Banerjee and Shubhankar Chakravorty

(Reuters) - Schlumberger Ltd (SLB.N) will buy equipment maker Cameron International Corp (CAM.N) for $14.8 billion, as the world's top oilfield services firm scrambles to offer a broader range of products at lower prices to oil companies slashing budgets.

The deal, which values Cameron around the market cap it had when oil prices were still $100 a barrel, marks the second big merger among energy services companies since crude prices (LCOc1) entered a 60 percent slide last year.

Halliburton and Baker Hughes, Schlumberger's rivals, agreed to a $35 billion tie-up in November.

Schlumberger said the acquisition will allow it to bundle its offerings, which range from surveying a site to drilling wells, with ones from Cameron that include pressure valves and blowout preventers, one of which was at BP's Macondo well that exploded in 2010.

The two companies know each other well. They set up a joint venture, OneSubsea, to target the deepwater industry in 2012.

They have been eyeing each other since then, a person familiar with the deal told Reuters who spoke on the condition of anonymity, noting that Schlumberger has a history of acquiring its partners.

"The deal should allow a more complete solution to customers and should allow SLB to grow market share," said BMO Capital Markets analyst Daniel Boyd. "Smaller companies offering discrete products and services will likely be at a disadvantage going forward."

Schlumberger said the combined company would have pro-forma revenue of $59 billion in 2014. That is 20 percent more than Schlumberger's revenue for 2014 and compares with $57.42 billion generated together by Halliburton Co (HAL.N) and Baker Hughes Inc (BHI.N).

The Halliburton and Baker Hughes deal is yet to close as U.S. antitrust enforcers believe the $35 billion merger will lead to higher prices and less innovation, according to a Reuters source. Billions in divestitures are planned in the hope of winning clearance.

Schlumberger, in comparison, said it expects no antitrust hurdles and has no plans to divest any part of Cameron's portfolio to get regulatory approval. An anti-trust lawyer described the product lines as complementary.

"With SLB-CAM, there is not much in the way of overlapping businesses ... we do not envision an overly difficult antitrust review," Oppenheimer analyst James Schumm said.

Cameron's shares were up about 41 percent at $60, below Schlumberger's $66.36 per share cash-and-stock offer, in afternoon trading on Wednesday. Schlumberger's shares fell as much as 7.5 percent to $68.01, their lowest in two-and-a-half years.

MACONDO CONNECTION

The Macondo well explosion in April 2010 killed 11 workers and spilled millions of barrels of oil into the U.S. Gulf of Mexico.

Investigators found Cameron's blowout preventer had battery and wiring troubles that hindered the proper functioning of the devices' blind shear rams, which are designed to slice through drilling pipes and cap a well in an emergency.

Cameron agreed to a $250 million settlement with BP PLC (BP.L) to help pay for costs associated with the spill.

Schlumberger's offer on Wednesday values Cameron at $12.74 billion, based on the company's diluted shares as of June 30.

Cameron shareholders will get $14.44 in cash and 0.716 of a Schlumberger share for each share held.

Schlumberger said it expects the deal to add to earnings by the end of the first year after the deal closes. The deal is expected to close in the first quarter of 2016.

Goldman Sachs & Co is Schlumberger's financial adviser and Baker Botts LLP and Gibson Dunn & Crutcher LLP are its legal counsel. Cameron's financial adviser is Credit Suisse and Cravath, Swaine & Moore LLP is its legal counsel.

(Additional reporting by Mike Stone in New York and Terry Wade and in Houston; Editing by Savio D'Souza, Sayantani Ghosh and Bernard Orr)