Oilfield services giant SLB on Tuesday announced plans to acquire chemistry solutions and drilling technology provider ChampionX (CHX). SLB stock retreated early Tuesday while CHX stock, an S&P Midcap 400 component, jumped.
SLB (SLB), formerly Schlumberger, plans to purchase ChampionX in an all-stock transaction. ChampionX’s board of directors unanimously approved the deal.
Under terms of the agreement, ChampionX shareholders will receive 0.735 shares of SLB common stock for each CHX share they own. At the close of the transaction, ChampionX shareholders will own about 9% of SLB’s outstanding common stock. SLB did not disclose an exact transaction price.
Houston-based SLB expects to realize annual pretax benefits of approximately $400 million in the first three years after closing the deal, from revenue growth and cost savings. The company expects the transaction will close before the end of 2024, pending approval from regulators and ChampionX shareholders.
SLB on Tuesday also announced plans to return $7 billion to shareholders over the next two years. The company will increase its 2024 shareholder return target to $3 billion with a target for $4 billion in 2025.
Goldman Sachs on Tuesday added SLB to its Conviction List as part of the firm’s April update. Goldman maintained a buy rating on the shares.
The ChampionX deal comes after SLB on March 27 announced an agreement to buy a majority stake in Oslo, Norway-based Aker Carbon Capture for 4.12 billion krone (about $380 million). ACC will own 20% of the combined company once the deal closes, which is expected by the end of Q2 202, with SLB owning the remaining 80%.
SLB stock fell 3.3% early Tuesday. Shares have been consolidating since the start of 2023. A seven-week advance has lifted shares up the right side of a saucer base toward a 62.12 buy point, according to MarketSurge charts. The stock advanced about 6.1% so far this year through Monday’s close.
ChampionX shares jumped 8.9% Tuesday morning. Also consolidating since early 2023, CHX is trading just above a 38.37 buy point for a cup base. ChampionX has rallied 21.2% year-to-date.
Meanwhile, West Texas Intermediate oil prices traded above $85 for the first time since October, up 20% year-to-date.
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