Technip Bid for CGG Said ‘Sensitive’ for French EconomyTara Patel
Technip SA’s bid for seismic surveyor CGG SA is “sensitive” for the French economy and the government is watching the potential deal closely, Economy Minister Emmanuel Macron said.
“It’s a sector that is important for the French economy and its sovereignty,” Macron said today in an interview. “It’s a sensitive sector. The actors have to organize themselves and work.”
Europe’s largest oil-and-gas-services company said it approached CGG on Nov. 10 about a cash offer of 8.30 euros a share, about 1.47 billion euros ($1.84 billion) -- an offer the seismic surveyor rebuffed. The French state holds almost a fifth of voting rights in CGG and is pushing for a combination, a person familiar with the matter who asked not to be identified said before the companies made the approach public on Nov. 20.
The government would support the tie-up if it’s a good industrial project with decision-making, research and development in France, according to a government official who declined to be named today and spoke separately from Macron.
Slumping crude prices are forcing oilfield-services companies to consider tie-ups as explorers cut investment budgets. News of Technip’s offer followed a $34 billion deal to combine the world’s second- and third-largest oil-services providers, Halliburton Co. and Baker Hughes Inc.
The government through the BPI fund and IFP Energies Nouvelles holds 18 percent of the voting rights of CGG. BPI also owns 5.2 percent of Technip.
“They are two private companies in which the state has a stake,” Macron said today. “I don’t want to speak at this stage. It’s not the state’s role to recommend any one course of action.”
CGG shares closed 2.5 percent lower today at 7.80 euros while Technip fell 4.6 percent to 53.30 euros, its lowest since September 2010.
The oil services sector has been hit hard by the plunge in crude, which touched a four-year low today. Offshore driller Seadrill Ltd. suspended dividends yesterday amid weakening demand for drilling rigs.
Global oversupply of vessels has led CGG to cut its fleet to 13 vessels from 18 and eliminate 10 percent of its workforce, or 1,000 jobs worldwide. Its shares have been volatile in recent months due to speculation it’s a takeover target and past concerns about debt.