DEFM14A: Schlumberger to Acquire ChampionX in All-Stock Deal, Awaiting Stockholder Approval

ChampionX stockholders are set to vote on a proposed merger agreement where Schlumberger will acquire ChampionX in an all-stock transaction.

Summary

• ChampionX Corporation is seeking stockholder approval for its merger with Schlumberger Limited (SLB) in an all-stock transaction.
• Under the agreement, each share of ChampionX common stock will be exchanged for 0.735 shares of SLB common stock.
• Based on SLB's closing price on April 1, 2024, this represented approximately $40.59 per ChampionX share, a 14.7% premium to ChampionX's closing price on the same day.
• As of May 14, 2024, based on SLB's closing price, the consideration was valued at approximately $35.74 per ChampionX share.
• Upon completion, former ChampionX stockholders are expected to own approximately 9% of the outstanding SLB common stock, while current SLB shareholders will own approximately 91%.
• A special meeting of ChampionX stockholders is scheduled for June 18, 2024, to vote on the merger proposal, an advisory vote on executive compensation, and a proposal to adjourn the meeting if necessary.
• The ChampionX Board of Directors unanimously recommends voting in favor of all proposals.
• The merger is expected to close before the end of 2024, pending stockholder and regulatory approvals.

Sentiment

Score: 7

Explanation: The document is a formal proxy statement, so the sentiment is neutral. However, the board's unanimous recommendation and the potential benefits of the merger suggest a slightly positive outlook.

Positives

• ChampionX stockholders will receive shares in a larger, more diversified company.
• The all-stock deal allows ChampionX stockholders to participate in the potential upside of the combined company.
• The ChampionX Board believes the merger is in the best interests of ChampionX and its stockholders.
• SLB has agreed to assume ChampionX's obligations under its equity plan and outstanding equity awards.
• SLB will apply to list the shares of SLB common stock to be issued and delivered in the Merger on the NYSE.

Negatives

• The value of the consideration is subject to the fluctuating price of SLB common stock.
• ChampionX stockholders will own a smaller percentage of the combined company compared to their current ownership of ChampionX.
• The exchange of ChampionX common stock for SLB common stock will be a taxable transaction for U.S. federal income tax purposes.
• The merger may not be accretive to SLB's earnings per share in the near term, potentially affecting the market price of SLB common stock.

Risks

• The market price of SLB common stock may be affected by factors different from those that historically have affected the market price of ChampionX common stock.
• The Combined Company may be unable to successfully integrate ChampionXs and SLBs businesses and realize the anticipated benefits or synergies of the Merger.
• SLB and ChampionX must obtain certain regulatory approvals and clearances to consummate the Merger, which, if delayed, not granted or granted with unacceptable conditions, could prevent, substantially delay or impair consummation of the Merger, result in additional expenditures of money and resources or reduce the anticipated benefits of the Merger.
• The trading price and volume of SLB common stock may be volatile following the completion of the Merger.

Future Outlook

The merger is expected to close before the end of 2024, subject to stockholder and regulatory approvals and other customary closing conditions.

Management Comments

• We at ChampionX look forward to the successful combination of ChampionX and SLB.
• The ChampionX Board has unanimously determined the Merger Agreement and the consummation of the Merger and the Transactions to be fair to and in the best interests of ChampionX and its stockholders.

Industry Context

The announcement comes amid a wave of consolidation in the oilfield services sector, as companies seek to expand their offerings and improve efficiency.

Comparison to Industry Standards

• The document references several comparable companies in the oilfield services and equipment industry, including Baker Hughes, Cactus, Core Laboratories, Halliburton, Hunting plc, NOV Inc., and Tenaris S.A.
• These companies are used to derive valuation multiples for ChampionX, such as EV/EBITDA, to assess the fairness of the Exchange Ratio.
• The document also analyzes premiums paid in precedent all-stock transactions involving U.S. publicly-traded companies and companies in the oil and gas sector to provide context for the premium offered to ChampionX stockholders.

Stakeholder Impact

• ChampionX stockholders will receive SLB common stock and have a smaller ownership stake in the combined company.
• Employees of ChampionX may experience uncertainty regarding their future roles.
• Customers and suppliers may seek to modify contractual obligations with the Combined Company.

Next Steps

• ChampionX will hold a special meeting of stockholders on June 18, 2024, to vote on the merger agreement.
• The parties will seek regulatory approvals to complete the merger.
• If approved, the merger is expected to close before the end of 2024.

Key Dates

Keywords

merger, Schlumberger, ChampionX, stockholders, acquisition, SLB, CHX, agreement