SLB Set To Acquire ChampionX, Return $7 Bln To Shareholders

SLB , formerly known as Schlumberger, has announced plans to acquire ChampionX ( CHX ), a leading provider of chemistry solutions and drilling technology. The acquisition, coupled with a substantial $7 billion shareholder return plan, signals SLB's commitment to driving growth and delivering value to its investors in the years to come.

The all-stock transaction, unanimously approved by ChampionX's board of directors, will see ChampionX shareholders receiving 0.735 shares of SLB common stock for each CHX share they own. Upon completion of the deal, ChampionX shareholders will own approximately 9% of SLB's outstanding common stock, underscoring the scale and significance of the acquisition.

Houston-based SLB anticipates significant synergies from the merger, with annual pretax benefits of approximately $400 million expected in the first three years post-closing. These benefits will be derived from a combination of revenue growth and cost savings, further enhancing SLB's competitive position in the market.

The transaction is subject to regulatory approval and the green light from ChampionX shareholders, with SLB aiming to finalize the deal before the end of 2024. Additionally, SLB has announced plans to return $7 billion to shareholders over the next two years, reaffirming its commitment to maximizing shareholder value and enhancing returns.

Goldman Sachs has expressed confidence in SLB's prospects, adding the stock to its Conviction List and maintaining a buy rating. This move reflects the firm's bullish outlook on SLB's growth trajectory and strategic initiatives.

The acquisition of ChampionX follows SLB's recent agreement to purchase a majority stake in Aker Carbon Capture, further expanding its portfolio and strengthening its position in the energy sector. With ACC set to own 20% of the combined entity, SLB's acquisition strategy is aimed at bolstering its capabilities and diversifying its offerings to meet the evolving needs of the industry.

On the stock front, SLB saw a slight easing of 1% following the announcement, while ChampionX shares surged by 10.4%. Both companies have been consolidating since early 2023, with SLB's stock showing a promising trajectory towards a potential breakout point. With West Texas Intermediate oil prices trading above $85 for the first time since October, the industry outlook appears favorable, providing a tailwind for SLB's growth prospects.

As SLB embarks on this transformative journey, the acquisition of ChampionX and the robust shareholder return plan underscore the company's vision and commitment to driving sustainable value creation. With a solid foundation and a strategic focus on innovation and efficiency, SLB is well-positioned to capitalize on emerging opportunities and deliver long-term value for its shareholders.