SLB Announces $7.8 Billion Acquisition of ChampionX in All-Stock Deal

Discover details on SLB's acquisition of ChampionX for $7.8 billion in an all-stock deal. Read about the strategic move and its market impact.

SLB (SLB.N), a leading oilfield services company, has announced its agreement to acquire ChampionX (CHX.O), a chemical and drilling technologies company, in an all-stock transaction valued at approximately $7.8 billion. The deal comes amidst increasing consolidation in the North American energy sector as companies navigate operational and pricing challenges while catering to customers who have reduced spending on new wells in favor of investor returns.

Deal Terms and Strategic Rationale

Under the terms of the agreement, ChampionX shareholders will receive 0.735 shares of SLB common stock for each share they own, representing a 14.7% premium based on Monday’s closing prices. The transaction values ChampionX at $40.59 per share and implies a market capitalization of $7.76 billion for the company.

The acquisition is expected to strengthen SLB’s portfolio by adding production chemicals and artificial lift technologies. James West, an analyst at Evercore ISI, noted that the deal would expand SLB’s exposure to the less cyclical and growing base of production globally and aligns closely with its returns-focused, capital-light strategy.

SLB anticipates annual pre-tax savings of approximately $400 million within the first three years after the deal closes, which is expected to occur before the end of 2024. Upon completion, ChampionX shareholders will own about 9% of SLB’s outstanding shares.

Shareholder Returns and Management Commentary

In a separate announcement, SLB increased its 2024 target for shareholder returns to $3 billion from “more than $2.5 billion” and set a target of $4 billion for 2025. The company stated that it would return $7 billion to shareholders over the next two years, highlighting its confidence in the value the transaction will create and its ability to continue generating strong cash flow from its broader portfolio.

“Our customers are seeking to maximize their assets while improving efficiency in the production and reservoir recovery phase of their operations,” said Olivier Le Peuch, Chief Executive of SLB. “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.”

This acquisition marks SLB’s second deal in a week and its largest purchase since acquiring oilfield gear maker Cameron International for $14.8 billion in 2016. It follows the trend of consolidation in the oilfield services sector, as exemplified by the recent merger agreement between Patterson-UTI Energy and NexTier Oilfield Solutions to create a $5.4 billion company.

Market Reaction and Outlook

Following the announcement, ChampionX shares surged 10% in pre-market trading, while SLB shares fell about 1% due to concerns over potential shareholder dilution in the all-stock deal.

The acquisition of ChampionX by SLB is expected to create a more comprehensive oilfield services provider capable of offering integrated solutions throughout the entire production lifecycle. As the energy sector continues to face challenges and consolidation, this deal positions SLB to better serve its customers and generate long-term value for its shareholders.