Schlumberger’s purchase of Cameron highlights the value attractions of the oil equipment sector
The oil equipment and services giant Schlumberger (SLB) has agreed to acquire US listed Cameron International Corp (CAM) for $66.36 a share, a c56% premium to yesterday’s closing price. The deal values the manufacturer of pressure control and rig systems for the oil and gas sector at approximately $13bn (9.6x EV/EBITDA) and could signal further consolidation activity as the large cash rich groups seek to secure their future position.
Schlumberger is already the leading oil services group (Mkt cap $92bn) and this deal will surely raise concerns among other industry participants that their competitive position could be eroded as SLB gains an even greater stranglehold on the sector with deals of this nature. SLB is a terrific generator of cash and with only modest net debt has plenty of fire power at its disposal. We remain of the view that niche providers of good technology in the oil equipment and services sector who have seen their share prices tumble over the past few months will be in the cross…