PGS and TGS combine to establish the premier energy data company
- Creating a stronger and more
diversified geophysical company and data provider to the energy
value chain, driven by technology and innovation
- The combined entity will offer a
robust position in all verticals: Multi-Client, acquisition,
imaging and new energy
- Significant economies of scale,
preliminary estimate of more than USD 50 million annually in cost
synergies
- Enhancing the value and technology
offering to clients
- Bringing together two complementary
players, creating the most attractive workplace in the
industry
- The transaction is supported by the
Board of Directors of both companies
Oslo, 18 September 2023
TGS ASA ("TGS" or the "Company", OSE: TGS) and PGS ASA (“PGS”,
OSE: PGS) announced today that they have agreed the principal terms
of a combination of TGS and PGS to create a strong full-service
energy data company.
The transaction is expected to be completed as a statutory
merger pursuant to Norwegian corporate law, with merger
consideration to PGS shareholders in the form of 0.06829 ordinary
shares of TGS for each PGS share.
Following the completion of the transaction, TGS and PGS
shareholders will own approximately 2/3 and 1/3 of the combined
company, respectively, on the basis of the share capital of each of
the companies as of 15 September 2023.
The transaction is supported by the Board of Directors of both
companies. Kristian Johansen and Sven Børre Larsen will continue as
CEO and CFO post transaction.
Definitive merger agreements are expected to be entered into in
October 2023, with closing of the transaction expected during the
first half of 2024, subject to satisfaction of conditions for
completion.
The transaction establishes the combined company as a
full-service geophysical data company with a strong offering in all
segments, including Multi-Client data, streamer data acquisition,
ocean bottom node (OBN) data acquisition, imaging and new energy
data. Moreover, the transaction helps mitigate supply chain risks
and will add further to economies of scale and efficiency,
enhancing the value offered to clients.
In Multi-Client, the combined company will offer customers a
global seismic library with data from all active basins in both the
western and eastern hemispheres. In data acquisition, the combined
company will be a substantial player globally with a strong
operational track record. For streamer acquisition, it will hold an
operational fleet of seven 3D data acquisition vessels, and for
ocean bottom node (OBN) acquisition, the combined company will
benefit from around 30,000 mid and deepwater nodes. Within imaging,
the combined company will offer a strong service to in-house and
external customers integrating on-premises and cloud based
high-performing computing services. In addition, the combined
company sees significant growth opportunities in new energy with
complementary technology offerings for Carbon Capture and Storage
(CCS) and offshore wind.
In addition to providing an improved client offering and a
platform for further profitable growth, the combination will
benefit from cost synergies with a preliminary estimate to be above
USD 50 million annually.
“We are excited to announce a merger with PGS, completing a
major milestone of building a fully integrated and robust global
energy data provider. Our clients will benefit from scale, a unique
technology portfolio and premier service quality. Bringing together
two distinct, yet complementary, companies positions us even better
for a continued upcycle in the energy sector", stated Kristian
Johansen, Chief Executive Officer of TGS.
"The seismic industry is changing whereby production seismic is
becoming increasingly important alongside the traditional
exploration seismic. By combining TGS and PGS’ complementary
resources, we create a fully integrated geophysical service
provider well positioned to generate significant value for all
stakeholders" stated Rune Olav Pedersen, President & Chief
Executive Officer of PGS.
"This is a strategic transaction for TGS and a major step on the
journey we started in 2019. It will combine the capabilities of
both companies to create a geophysical powerhouse. The transaction
continues TGS’ strategic development from a pure Multi-Client
seismic company to the leading acquirer and provider of geophysical
data to both the oil and gas and new energy industries” stated
Chris Finlayson, Chair of the Board of TGS.
"The merger creates a full-service geophysical company with a
strong balance sheet. Financial flexibility enables investments in
attractive core activities as well as in the rapidly growing new
energy business. The pioneering innovation cultures in both
companies will contribute to a strong foundation for new product
offerings and profitable growth” stated Walther Qvam, Chair of the
Board of PGS.
Financing: The combined company will have a
combined fully diluted market cap of approx. USD 2,616 million and
a net interest-bearing debt (NIBD) of USD 649 million (2Q 2023),
corresponding to a market cap:NIBD ratio of 80:20. The combined
company will seek to optimize its capital structure, efficiency and
cost based on the strength of the combined balance sheets and cash
flows. As such, the combined company plans to refinance PGS’ USD
450 million senior notes and the term loans on first call
opportunity. As an overriding principle, TGS will continue to
maintain a conservative balance sheet profile.
Key terms of the merger:Based on a TGS share
price as of close 15 September 2023 of NOK 147.50, the exchange
ratio of 0.06829 and 925,321,732 fully diluted PGS shares, the
equity value of PGS is NOK 9,321 million, corresponding to a price
per share of NOK 10.073. This represents a premium, of 20.7% to PGS
closing price on 15 September 2023 and an exchange ratio premium of
22.4%, 40.8% and 41.6% based on 30 days, 3 month and 6 months VWAP
as of 15 September 2023, respectively.
Future TGS dividend payments up to closing will be compensated
to PGS shareholders. The full merger plan is expected to be
published during October 2023.
The transaction remains subject to certain conditions, including
a confirmatory due diligence by both parties, finalizing and
executing a definitive merger plan, as well as customary closing
conditions such as relevant regulatory approvals and consents and
expiry of statutory waiting periods and no material adverse change
occurring. The transaction is also subject to approval by
extraordinary general meetings in both TGS and PGS with at least
two-thirds majority. Closing of the transaction would occur as soon
as possible thereafter.
Conference call: Further information regarding
the transaction will be provided in a joint TGS and PGS conference
call at 10:00 (CEST) on 18 September 2023. A replay of the
conference call will be provided at tgs.com and pgs.com.
Link to webcast:
https://channel.royalcast.com/landingpage/hegnarmedia/20230918_1/
Advisors:SpareBank 1 Markets is acting as
financial advisor and Schjødt is acting as legal advisor to TGS.
Pareto Securities is acting as financial advisor and Advokatfirmaet
BAHR is acting as legal advisor to PGS.
Contact information:
TGS:Sven Børre LarsenCFOTel: +47 909 43 673Email:
investor@tgs.com
PGS:Gottfred LangsethCFOTel: +47 930 55 580Email:
ir@pgs.com
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