Technip Will Probably Raise Takeover Offer for CGG, UBS Says

CGG’s seismic survey vessel Geo Caspian in the dry dock at Keppel Benoi Shipyard in Singapore for her 5-year classification inspection this past August. Image: CGG

By Tara Patel

Dec. 5 (Bloomberg) — Technip SA, Europe’s largest oil-and- gas services company, will probably raise its 1.47 billon-euro ($1.8 billion) offer for rival, CGG SA, according to UBS AG.

There is a “high probability that Technip formalises an offer for CGG at a price slightly higher than currently contemplated,” UBS analysts including Amy Wong wrote in a note today. Raymond James Financial and CM-CIC Securities have also said this week that they expect Technip to increase its offer.

CGG’s board last month rejected Technip’s 8.30 euro a share cash offer, saying conditions to pursue the proposal hadn’t been met. The French government is key to combining the Paris-based oil-services companies as it holds 18 percent of CGG’s voting rights via the state-run BPI fund and IFP Energies Nouvelles, while BPI also owns 5.2 percent of Technip.

CGG rose 2.9 percent to 8.71 euros by 2:18 p.m. in Paris, bringing its gains to 34 percent since the offer was confirmed by Technip on Nov. 20. Technip climbed 0.7 percent to 50.29 euros, paring its losses over that period to 17 percent.

Spokesmen for Technip and CGG declined to comment.

Technip confirmed the potential offer after the unveiling of a $34 billion deal in the U.S. to combine the world’s second- and third-largest oil-services providers, Halliburton Co. and Baker Hughes Inc.

While UBS raised its price target for CGG to 9 euros a share from 6.50 euros to reflect the company’s “break-up valuation,” the bank doubts the logic of a combination with Technip.

“We question the strategic sense of the deal on the basis of low returns,” UBS said.

Separately, France’s stock market regulator remains “vigilant” on the two listed companies, said a spokeswoman for the Autorite des Marches Financiers.

Copyright 2014 Bloomberg.

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