Veritas, PGS to Merge

Petroleum Geo-Services ASA and Veritas DGC Inc. agreed Monday to merge in a stock-for-stock deal worth more than $770 million, creating the second-biggest geophysical services firm in the world.

Under the terms of the deal, billed as a merger of equals, both Veritas and PGS will become wholly owned subsidiaries of a new holding company that hasn't been named yet, said Rene VandenBrand, Veritas' vice president for business development. 

PGS shareholders will get .47 shares in the new company for each share they own, giving them a value of $7.54 a share. Veritas shareholders, meanwhile, will exchange each share they own for one share of the new firm. PGS will end up with 60 percent of the company. 

The merger is subject to shareholder and regulatory approval. 

In a joint statement, PGS chairman and chief executive Reidar Michaelsen and Dave Robson, his Veritas counterpart, said consolidation throughout the energy industry made the deal make sense. 

"By combining our complementary, high-quality seismic data libraries, we will be uniquely positioned to offer our customers a much broader array of sophisticated ... geophysical data in active and highly prospective areas around the world," both men said in a news release. 

Michaelsen will serve as chairman and co-CEO of the combined firm while Robson will become vice chairman and co-CEO. The combined company's board will comprise of 10 directors, four from each firm and two newly-appointed directors. 

Shares of Petroleum Geo-Services were up 16 cents, or 3 percent, in trading on the New York Stock Exchange to close at $5.46, while shares of Veritas fell 20 cents to close at $16.05. 

The merger was announced after markets closed. 

Houston-based Veritas supplies seismic data to oil and gas companies, mapping land and sea. That information, in turn, is used by companies to find possible locations for drilling exploratory wells. It analyzes its data at 16 processing centers around the world and employs 4,300 workers. 

Before it purchased Veritas Energy Services in 1996, the company was called Digicon. 

Oslo, Norway-based Petroleum Geo-Services employs 4,200 workers and offers similar services. It operates more than 20 seismic vessels and has four floating production, storage and offloading systems and four data processing centers. 

The new company will be based in Houston, VandenBrand said, but will keep a sizeable presence in Norway. 

Cost savings from combining operations, including an undisclosed number of job cuts, are expected to be $35 million annually. 

Michaelsen will serve as chairman and co-chief executive of the new company, for which a name was not given. Robson will be vice chairman and co-chief executive. 

Pending approval by regulators and Veritas shareholders, the companies expect to cement the deal by next spring.