11:28 AM EDT, 04/02/2024 (MT Newswires) -- Schlumberger ( SLB ) agreed to buy oilfield technology solutions provider ChampionX ( CHX ) in an all-stock deal, expanding the former's capabilities in the production space.

Each ChampionX ( CHX ) share will be entitled to 0.735 shares of oilfield services company Schlumberger ( SLB ), translating into $40.59 per ChampionX ( CHX ) share, according to an investor presentation. That represents a premium of 14.7% from ChampionX's ( CHX ) closing price on Monday. The $40.59-per-share consideration gives a deal valuation of $7.76 billion, according to MT Newswires' calculation.

ChampionX ( CHX ) provides chemistry solutions, artificial lift systems and technologies that help companies drill for and produce oil and gas. Shares of Schlumberger ( SLB ) fell 2% in Tuesday trade while those of ChampionX ( CHX ) climbed 9%.

The acquisition will expand Schlumberger's ( SLB ) presence in "the less cyclical and growing production and recovery space," according to Schlumberger ( SLB ) Chief Executive Olivier Le Peuch.

"Our customers are seeking to maximize their assets while improving efficiency in the production and reservoir recovery phase of their operations," Le Peuch said in a statement. "This presents a significant opportunity for service providers who can partner with customers throughout the entire production lifecycle, offering integrated solutions and delivering differentiated value."

The transaction is expected to close before the end of 2024, pending shareholder and regulatory approvals. Schlumberger ( SLB ) is targeting pre-tax annual synergies of roughly $400 million within three years post closing. Following deal completion, ChampionX ( CHX ) shareholders will own about 9% of Schlumberger ( SLB ).

"The combination provides compelling value creation and the opportunity to share in significant upside from the realization of synergies, including accelerated growth opportunities given the complementary nature of the respective portfolios," ChampionX ( CHX ) CEO Soma Somasundaram said.

For buy-rated Schlumberger ( SLB ), the deal is a "slight positive" because of ChampionX's ( CHX ) "asset-light and resilient" business, Tudor Pickering Holt energy analyst Matt Portillo said in a note. "As global assets continues to mature, chemical intensity should increase as usage is levered to total production (i.e. inclusive of water production). Additionally, offshore environments are more chemically intensive, playing to the strengths of SLB," he said.

Schlumberger ( SLB ) said Tuesday it will return $7 billion to shareholders over the next two years, increasing its 2024 shareholder returns target to $3 billion and estimating $4 billion for 2025.

Price: 54.02, Change: -1.20, Percent Change: -2.17