SLB’s pending acquisition of ChampionX faces enhanced antitrust scrutiny

The U.S. Department of Justice (DOJ) has extended its antitrust review of Schlumberger Ltd.’s (SLB) merger with fellow energy solutions provider ChampionX Corp., which could delay its closing until next year, SLB announced.

As SLB said in a statement, both companies independently received a so-called “second request” from the Department of Justice to provide details of the transaction.

The Hart-Scott-Rodino (HSR) Antitrust Improvements Act requires parties in certain acquisitions and mergers to notify the DOJ and the Federal Trade Commission (FTC) about the transactions. The two enforcement agencies then review the transaction for a period of typically 30 days — known as a waiting period — before it can be completed, the FTC says on its website.

If, during the waiting period, the FTC or DOJ determines that further investigation is warranted, the adjudicating agency can ask the parties to the transaction for additional information and documents. This action, called a second request, extends the waiting period, usually also by 30 days, according to the FTC. Federal reviewers can initiate a court application for an injunction if they find a possible antitrust violation.

“SLB currently expects the transaction to close in the fourth quarter of 2024 or the first quarter of 2025, subject to regulatory approvals and other customary closing conditions,” SLB said in a statement announcing the extended investigation. An initial timeline for closing the transaction was given before the end of this year.

Shareholders of The Woodlands, Texas-based ChampionX approved the all-stock deal last month, putting up nearly $170 million in favor compared to nearly $540,000 against, according to a June 18 regulatory disclosure from ChampionX.

Under the merger agreement announced on April 2, ChampionX shareholders will receive 0.735 shares of SLB common stock for each share of ChampionX stock. Following closing, ChampionX shareholders will own approximately nine percent of SLB’s outstanding common stock.

ChampionX has over 190 million common shares outstanding with a par value of $0.01 each, according to the company’s most recent filing with the U.S. Securities and Exchange Commission.

“SLB’s acquisition of ChampionX comes at an important time for the industry,” SLB said in a statement last April announcing the deal. “The production phase of an oil and gas operation typically encompasses the majority of an asset’s lifecycle from completion to decommissioning. This places a premium on the ability of service providers to help customers solve problems throughout their production system.

“At the same time, there is a growing need to scale new technologies, such as artificial intelligence and autonomous operations, across global operations.”

SLB CEO Olivier Le Peuch said at the time: “Combining ChampionX’s strong, manufacturing-focused leadership in North America and beyond with our own international presence, unmatched technology portfolio and history of innovation will deliver tremendous benefits to our customers and stakeholders.”

“Our core strategy remains focused on meeting growing energy demand while accelerating decarbonization and emissions reductions through innovation, scale and digitalization across our core oil and gas business,” Le Peuch added.

“This acquisition will expand SLB’s presence in the less cyclical and growing production and recovery sector, which is closely aligned with our strategy focused on earnings and low capital.”

If the merger goes through, ChampionX would survive as a subsidiary of SLB.

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