Petroleum Geo Services, Veritas DGC in Merger Pact

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Petroleum Geo Services

(PGO)

and

Veritas DGC

(VTS)

agreed to merge in a stock swap that will create the second-biggest geophysical service provider in the world.

Under the terms of the agreement, valued at more than $770 million, both companies will become wholly owned subsidiaries of an as yet unnamed holding company. PGS would end up with control of about 60% of the combined company, with Veritas owning the rest. PGS shareholders will get 0.47 shares in the combined company for each share they own, giving them a $7.54 a share value and placing a 38% premium on the stock's Monday closing price of $5.46.

The merger, subject to regulatory and shareholder approval, is expected to generate annual cost savings of $35 million through the combining of operations, including an undisclosed number of job cuts. Pending approval, the companies expect to complete the merger by next spring.