TGS, PGS to Form $2.6 Billion Data Firm as Oil Services Rebound

TGS ASA agreed to buy Norwegian rival PGS ASA in an all-share deal as the companies seek to take advantage of a rebounding market for geophysical data for the offshore energy industry.

(Bloomberg) — TGS ASA agreed to buy Norwegian rival PGS ASA in an all-share deal as the companies seek to take advantage of a rebounding market for geophysical data for the offshore energy industry.

TGS is offering 0.06829 of its shares for each PGS share in a deal that has the backing of both boards, the Oslo-based companies said in join statement on Monday. TGS shareholders will end up with about two thirds of the combined company, which will have a fully-diluted market capitalization of about $2.62 billion and net interest-bearing debt of $649 million.

The deal gives TGS the ability to acquire geophysical data with its own vessels with the addition of PGS’ fleet and comes as the oil services industry gradually improves with oil and gas companies raising investments in offshore exploration. Both stocks are trading at less than half their value five years ago. 

TGS shares dropped as much as 7.1% in early trading in Oslo, while PGS stock jumped as much as 16%.

The companies estimate that the deal will result in synergies of more than $50 million a year, as well as helping to mitigate supply chain risks, they said. The combined company plans to refinance PGS’ $450 million senior notes and the term loans on first call opportunity.

“Bringing together two distinct, yet complementary, companies positions us even better for a continued upcycle in the energy sector,” TGS CEO Kristian Johansen said in the statement. The transaction will improve scale and provide clients with a unique technology portfolio, he said.

Definitive merger agreements are expected to be entered into in October, with the transaction expected to close during the first half of 2024.

SpareBank 1 Markets advised TGS, while Pareto Securities is financial adviser to PGS.

More stories like this are available on bloomberg.com

©2023 Bloomberg L.P.