Petroleum Geo Services
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.