TGS Acquires Spectrum

Seismic survey company TGS-NOPEC Geophysical Company (TGS) said it will acquire rival seismic survey company Spectrum ASA.

The transaction is expected to be completed as a statutory merger pursuant to Norwegian corporate law between TGS and Spectrum, with merger consideration to Spectrum shareholders in the form of 0.28x ordinary shares of TGS for each Spectrum share, in addition to a cash consideration of $0.27 multiplied by the Exchange Ratio subject to the transaction closing after the ex-date for the TGS dividend payable in th third quarter of 2019 (expected to be early August 2019).

Definitive merger documents are expected to be entered into during May, with closing of the transaction expected during the third quarter of 2019 following shareholder approvals in EGM and regulatory clearance.

According to TGS, the transaction will enhance its position as a multi-client geophysical data provider with a 2D and 3D seismic data library covering all major mature and frontier basins world-wide. Spectrum has successfully built a substantial presence in the South Atlantic and other important frontier regions.

With TGS' extensive library and financial robustness, the combined entity will be well positioned to accelerate 3D seismic investment plans in an improving market. Furthermore, the combined libraries will have a scale that will help accelerate TGS' data analytics strategy.

In addition to providing a platform for further profitable growth, the combination will benefit from significant cost synergies with a preliminary estimate of approximately $20 million annually, it said.

Kristian Johansen, Chief Executive Officer of TGS, said, "Spectrum has successfully built a strong position in key offshore basins, particularly in the South Atlantic. The transaction thus fits well with one of TGS's key strategic goals of growing exposure to this region. Moreover, Spectrum's library, and in particular the vast 2D coverage, further adds to TGS's strategy within data analytics, where access to large amounts of data is a key success factor."

"TGS remains committed to maintain the existing dividend policy and emphasizes that the strong cash position, the combination of two free cash flow positive entities and significant cost synergies, will enable continued industry leading shareholder returns," he added.

Rune Eng, President & Chief Executive Officer of Spectrum, said, "The strategic combination of TGS and Spectrum will form a stronger and better company with a world class data library, people and opportunities. We look forward to joining forces with TGS. There are strong strategic benefits from combining the companies, and we believe we can enhance our growth as part of a larger combined company."