Monday July 12, 10:10 am Eastern Time
Schlumberger offshore unit merging
with Transocean
NEW YORK, July 12 (Reuters) - Schlumberger Ltd
(NYSE:SLB - news), the No. 2 oil service company, said on
Monday it will spin off its offshore drilling business, which will
then merge into Transocean Offshore Inc.(NYSE:RIG - news) to
form the world's top offshore driller.
In a prepared statement, both companies said Schlumberger shareholders will own 52 percent of the
new company, Transocean Sedco Forex, when the deal is done, likely by the end of the year.
The new company is also projected to become the No. 4 oilfield service company in terms of
market capitalization, with a value of $3.2 billion based on Transocean's closing price Friday of $29
per share, the joint statement continued.
The deal is likely to hurt Transocean Offshore's current earnings expectations for 2000 and to help
them thereafter, the statement said According to First Call Corp., the market research firm, analysts'
consensus estimates put the company's earnings at $1.50 a share for 2000 and $2.20 for 2001.
Under the proposed agreement, Schlumberger will spin-off its Sedco Forex unit. Based on the 101
million Transocean shares now outstanding, Schlumberger holders will end up with about 109 million
shares in the new company -- about one share for each five they now hold.
Following the transaction, the shares of Transocean Sedco Forex will be traded on the New York
Stock Exchange under Transocean's present symbol, ''RIG.''
The transactions are expected to be free of U.S. federal income taxes and will be accounted for as a
purchase, with Sedco Forex Offshore as the accounting acquirer.
The agreement has been approved by directors of Transocean Offshore and Schlumberger, and is
subject to the stockholder and regulatory approval.
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