Veritas and PGS have failed in their bid to merge. A new company Veritas-GeoServices was to be created in what had been trumpeted as ‘a merger of equals’. But, as George Orwell put it in Animal Farm, some are more ‘equal’ than others.
Following protracted discussions the companies recently signed an amendment to the original agreement that shifted the balance of power from a 60/40 split in favor of PGS shareholders down to a 55/45 split.
Veritas CEO Dave Robson was to be CEO of the new company while PGS CEO Reidar Michaelsen would have been chairman of the board. The negotiations were tough even before the deal was abandoned, as Michaelsen and Robson revealed, “Completing this transaction has been a challenge, but the compelling benefits for both companies have led all concerned to work towards a solution that meets all of the major objectives.”
“Ongoing consolidation among our customers and the need for continued investments in people and technology make this a great opportunity. We will be uniquely positioned to offer our customers a much broader array of sophisticated 2D, 3D and 4D geophysical data and services.” The combined companies would have mustered 21 marine crews, 8 visualization centers and 27 seismic processing centers throughout the world, along with a 400,000 square kilometer library of modern 3D.
A get-out clause was invoked by Veritas as attempts to assure financing for the new company failed to bear fruit. The companies were exploring the availability to of additional financial resources and evaluating several financing alternatives.
But current market conditions meant that finding such extra finance was this a tough call. Merger plans were scuppered when PGS received a written communication from Veritas to the effect that its board of directors had withdrawn approval for the pending combination. In light of this communication, PGS announced that it was terminating the merger agreement forthwith.
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