(Reuters) -Top oilfield services company SLB said on Tuesday it will buy smaller rival ChampionX in an all-stock deal valued at $7.75 billion, amid growing consolidation in the North American energy sector.

Oilfield services companies have followed energy producers in pursuing deals, as they navigate operational and pricing challenges and cater to customers who have cut spending on new wells in favor of investor returns.

ChampionX shareholders will receive 0.735 shares of SLB common stock, or $40.59 per share, representing a premium of 14.6% to ChampionX's last closing price, according to Reuters calculation.

Shares of SLB fell about 1% before the bell, while ChampionX surged 10% after a brief trading halt.

The deal is expected to close before the end of 2024. SLB said it expects an annual pre-tax savings of about $400 million in the first three years after the closure.SLB said it would return $7 billion to shareholders over the next two years and increase its 2024 shareholder returns to a target of $3 billion.

(Reporting by Arunima Kumar in Bengaluru; Editing by Arun Koyyur)