In yet another consolidating move in the energy sector, oil services giant SLB – aka Schlumberger – announced Tuesday it agreed to acquire ChampionX Corp. of The Woodlands in an all-stock transaction valued at $7.7 billion.
The transaction is SLB’s largest purchase since Cameron International and second over the last week. On March 27, it announced it would combine its carbon capture business with Norway’s Aker Carbon Capture, agreeing to pay $379.7 million.
SLB said the acquisition strengthens it as a leader in production space with world-class chemicals and artificial lift technologies. It added that the combined portfolios will drive customer value through industry expertise and digital integration as well as enhanced equipment life and production optimization.
Under the terms of the agreement, ChampionX shareholders will receive 0.735 shares of SLB common stock in exchange for each ChampionX share, which represents a 14.7 percent premium. After the close of the acquisition, ChampionX shareholders will own roughly 9 percent of SLB.
The transaction has to clear ChampionX shareholders and regulators. SLB expects to close the deal before the end of 2024.
At first blush, TPH analyst Matt Portillo said in a note that the deal is a slight positive given that ChampionX’s business is both “asset-light and resilient” via its leverage to production.
“As global assets continues to mature, chemical intensity should increase, as usage is levered to total production,” he said. “Additionally, offshore environments are more chemically intensive, playing to the strengths of SLB.”
SLB said the acquisition will be accretive to free cash flow per share next year and earnings per share in 2026. SLB is expecting to realize around $400 million in synergies within three years with 70 percent to 80 percent realized in 2026, mainly via opex reductions, G&A savings and revenue synergies via the expansion of ChampionX’s international portfolio and new technology offerings.
The company also announced that it was increasing total shareholder returns to $3 billion this year and $4 billion next year.
SLB CEO Olivier Le Peuch said in a statement that the acquisition will expand the company’s presence in the less cyclical and growing production and recovery space, which is closely aligned with its returns-focused, capital-light strategy.
“Our customers are seeking to maximize their assets while improving efficiency in the production and reservoir recovery phase of their operations,” he added. “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.”
SLB is represented by an in-house team led by Houston-based Dianne Ralston, chief legal officer and secretary; David Gooch, legal director, transactions & oversight, Samantha Blons, senior corporate legal counsel; John M. Benson, legal director, governance and integrity; and Brandon Clark, general counsel – intellectual property.
Latham & Watkins was outside counsel to SLB with a corporate deal team led by Houston partner Ryan Maierson, Chicago partner Christopher Drewry and Houston counsel Thomas Verity with associates Bryan Ryan, Andrew James, Haley Sandoval, Eugenio Enrique Ascanio Carrera and Caroline Silverstein.
Washington, D.C., partner Nicholas DeNovio and New York partner David Raab handled tax matters with associate Abigail Friedman. Other members on the team included Los Angeles/Orange County partner Michelle Carpenter and Washington, D.C., partner Nikhil Kumar with associate Dane Rebkowec on benefits and compensation matters; Washington, D.C., partners Amanda Reeves and Jason Cruise and Brussels counsels Tomas Nilsson and Philipp Studt with associates Doug Tifft, Romain Perrois and Jean-Baptiste Douchy on antitrust; New York partner Jeffrey Tochner with associates Zachary Shufro and Victoria Allen on IP/transition services; and San Diego partner Colleen Smith on litigation.
Advice was given on finance matters by Houston partner Catherine Ozdogan with associate Brian Flynn; on environmental matters by Los Angeles/Houston matters Joshua Marnitz and Washington, D.C., counsel Allison In with associate Nathaniel Glynn; on trade controls/CFIUS matters by Washington, D.C., partner Damara Chambers and counsel Ruchi Gill with associate Ragad Alfaraidy; on sanctions/FCPA matters by Washington, D.C., partner Eric Volkman with associate Matthew Gregory; on data protections matters by Bay Area partner Robert Blamires with associate Kathryn Parsons-Reponte; and on real property matters by Chicago counsel Jeffrey Anderson.
Milbank provided some U.S. antitrust advice, including partners Fiona Schaeffer in New York and Adam Di Vincenzo in Washington, D.C.
Weil is representing ChampionX with a team led by partner Michael Aiello in New York and including partner Amanda Fenster in New York and counsel Claudia Lai in Dallas.