425: SLB Acquisition of ChampionX Faces Delay Due to Regulatory Review in Norway

SLB announces that its planned acquisition of ChampionX is now expected to close by the end of the first quarter or early in the second quarter of 2025 due to an ongoing Phase II review by the Norwegian Competition Authority.

Summary

• SLB (Schlumberger) is pursuing the acquisition of ChampionX.
• The U.S. Hart-Scott-Rodino (HSR) Antitrust Improvements Act waiting period has expired, allowing the transaction to proceed in the United States.
• SLB and ChampionX have agreed to sell ChampionX's equity interests in US Synthetic Corporation (USS) to a third party, while SLB will retain its MegaDiamond business.
• The acquisition is still subject to antitrust review in other jurisdictions, specifically Norway, where the Norwegian Competition Authority has initiated a Phase II review.
• The closing of the transaction is now expected by the end of the first quarter or early in the second quarter of 2025, a delay from the previously anticipated timeline.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the HSR approval in the US is positive, the delay due to the Norwegian review introduces uncertainty. The sale of USS is a necessary condition, neither positive nor negative in itself.

Positives

• The expiration of the HSR waiting period in the U.S. is a positive step towards completing the acquisition.
• The agreement to sell USS allows the acquisition to move forward while addressing potential antitrust concerns.
• SLB retaining the MegaDiamond business ensures continued operations in the polycrystalline diamond compact cutters market.

Negatives

• The Phase II review by the Norwegian Competition Authority introduces uncertainty and delays the closing of the transaction.
• The delay pushes the expected closing date to the end of Q1 or early Q2 2025, impacting the timeline for realizing the benefits of the acquisition.

Risks

• The ongoing antitrust review in Norway could potentially lead to further delays or require additional concessions.
• Unforeseen circumstances or regulatory hurdles in other jurisdictions could also impact the closing of the transaction.
• The integration of ChampionX's business with SLB may present challenges in achieving anticipated synergies and value creation.

Future Outlook

SLB expects the transaction to close by the end of the first quarter or early in the second quarter of 2025, subject to regulatory approvals and customary closing conditions.

Industry Context

The acquisition of ChampionX by SLB reflects a trend of consolidation in the oilfield services industry, as companies seek to expand their capabilities and market reach. The deal aims to combine SLB's technology leadership with ChampionX's expertise in chemistry solutions and artificial lift systems.

Comparison to Industry Standards

• It is difficult to compare this announcement to industry standards as it is a regulatory update on a merger.
• Comparable transactions in the oilfield services sector, such as Baker Hughes' acquisition of BJ Services' pressure pumping business, have also faced regulatory scrutiny and required divestitures to address antitrust concerns.
• The Phase II review in Norway is similar to extended reviews seen in other cross-border mergers, reflecting the increasing complexity of global antitrust regulations.

Stakeholder Impact

• Shareholders of ChampionX are awaiting the completion of the acquisition by SLB.
• Employees of both SLB and ChampionX may experience uncertainty during the integration process.
• Customers of both companies can expect a broader range of products and services following the merger.
• The sale of USS will impact its employees and customers, as it becomes part of a new organization.

Next Steps

• SLB and ChampionX will continue to cooperate with the Norwegian Competition Authority in its Phase II review.
• The companies will work to satisfy all remaining closing conditions to complete the transaction.
• SLB will proceed with the sale of ChampionX's equity interests in US Synthetic Corporation (USS) to a third party.

Key Dates