Oilfield services company SLB (NYSE:SLB) announced the acquisition of ChampionX Corp (NASDAQ:CHX) in an all-stock deal worth $8 billion. CHX stock soared in pre-market trading following the news of the acquisition. ChampionX is a provider of engineering equipment that helps oil companies drill for oil and gas.
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Terms of the SLB-CHX Deal
According to the terms of the deal, ChampionX shareholders will receive 0.735 shares of SLB common stock in exchange for each CHX share. After the close of the deal, ChampionX shareholders will own around 9% of SLB’s outstanding shares.
The acquisition is expected to be completed by the end of this year.
Benefits to SLB
The acquisition is expected to bolster SLB’s position as a frontrunner in the production sector and will enhance its capabilities with top-tier production chemicals and artificial lift technologies.
Moreover, SLB expects to realize $400 million in annual pretax synergies within the first three years after the close of the deal.
Is SLB a Good Stock to Buy?
Analysts remain bullish about SLB with a Strong Buy consensus rating based on nine Buys and one Hold. Year-to-date, SLB stock has gained by more than 6% and the average SLB price target of $67 implies an upside potential of 21.3% at current levels.
