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ChampionX Corp. (NASDAQ:CHX) shares are trading higher, while Schlumberger Ltd. (NYSE:SLB) shares are down after the Texas-based companies announced an all-stock deal.
What Happened: Schlumberger will acquire ChampionX, and the shareholders will receive 0.735 shares of Schlumberger in exchange for each ChampionX share.
ChampionX shareholders will own approximately 9% of Schlumberger’s common shares once the deal closes.
Post closure, Schlumberger expects to realize annual pretax synergies of around $400 million within the first three years through revenue growth and cost savings.
The transaction is projected to close before 2024, subject to shareholder and regulatory approval.
Shareholder Return: The company disclosed that it will return $7 billion to shareholders over the next two years.
Schlumberger will increase its shareholder returns for 2024 to a target of $3 billion and project returns of $4 billion for 2025.
Olivier Le Peuch, SLB’s chief executive officer, said, “Our core strategy remains centered on meeting growing energy demand while accelerating decarbonization and emissions reduction through innovation, scale and digitalization in our core oil and gas business. This acquisition will expand SLB’s presence in the less cyclical and growing production and recovery space that is closely aligned with our returns-focused, capital-light strategy,”
As of Dec. 31, 2023, Schlumberger’s cash and short-term investments stood at $3.99 billion.
Investors can gain exposure to ChampionX and Schlumberger via Invesco Oil & Gas Services ETF (NYSE:PXJ), VanEck Oil Services ETF (NYSE:OIH), and IShares U.S. Oil Equipment & Services ETF (NYSE:IEZ).
Price Action: CHX shares are up 8.45% at $38.40 and SLB is down 2.68% at $53.74 on the last check Tuesday.
