NEW YORK (TheStreet) -- Cameron International (CAM) stock is climbing by 41.25% to $59.99 on heavy trading volume on Wednesday morning, after the company agreed to be acquired by Schlumberger (SLB) - Get Schlumberger NV Report in a transaction valued at $14.8 billion.
Schlumberger stock is falling 5.25% to $68.71 on heavy trading volume this morning.
Cameron shareholders will receive 0.716 Schlumberger shares and $14.44 in cash per each share.
"For our shareholders, this combination provides significant value, while also enabling them to own a meaningful share of Schlumberger," Cameron CEO Jack Moore said in a statement.
The companies expect $300 million and $600 million in synergies in the first year and second year, respectively, related to lower operating costs, streamlined supply chains and an improved manufacturing process.
Regulators and Cameron shareholders will have to approve the transaction, which is expected to close in the first quarter of 2016.
Schlumberger and Cameron, both based in Houston, provide services and equipment to the oil and gas industries.
So far today, 14.24 million shares of Cameron have exchanged hands, compared with its average daily volume of 2.67 million shares.
Additionally, 11.58 million shares of Schlumberger have exchanged hands today, compared with its average daily volume of 7.35 million shares.
Separately, TheStreet Ratings team rates CAMERON INTERNATIONAL CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CAMERON INTERNATIONAL CORP (CAM) a HOLD. The primary factors that have impacted our rating are mixed – some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.64, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.17, which illustrates the ability to avoid short-term cash problems.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 22.4%. Since the same quarter one year prior, revenues fell by 13.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- CAMERON INTERNATIONAL CORP's earnings per share declined by 26.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CAMERON INTERNATIONAL CORP increased its bottom line by earning $3.85 versus $2.62 in the prior year. For the next year, the market is expecting a contraction of 10.9% in earnings ($3.43 versus $3.85).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Energy Equipment & Services industry. The net income has significantly decreased by 36.9% when compared to the same quarter one year ago, falling from $222.00 million to $140.00 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 39.83%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 26.04% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- You can view the full analysis from the report here: CAM Ratings Report