TGS to acquire Spectrum in all stock transaction

5/19/2019

OSLO -- TGS-NOPEC Geophysical Company ASA has announced that it has agreed on the principle terms for the acquisition of Spectrum ASA, creating a leading provider of 2D and 3D seismic data for $422 million (NOK 3,671 million payable in third-quarter 2019 (expected to be early August 2019).

The transaction will enhance TGS’ position as a leading 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.

“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”, stated Kristian Johansen, CEO of TGS.

“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,” stated Rune Eng, president & CEO of Spectrum.

“Over the past years, Spectrum has been through a growth phase with particular focus on establishing profitable positions in non-mature exploration basins, especially along the Atlantic margin. TGS´ interest in Spectrum is a manifestation of the solid position built by the Spectrum organization over a long time. Being ready for the next phase of the strategic growth plan, TGS is an excellent match, with its asset-light multi-client strategy and strong balance sheet. Altor Fund IV are proud to be part of creating a leading multi-client company, with a strong presence in all the major basins and superior cash generation capabilities”, stated Pål Stampe, chairman of the board of Spectrum and partner at Altor Equity Partners, the investment advisor to Altor Fund IV.

Support from board of directors, management and Spectrum shareholders

The transaction is supported by the board of directors of Spectrum, who has unanimously concluded that the transaction both from a financial and industrial perspective represents an attractive alternative for all its stakeholders.

In addition, Spectrum shareholders representing more than 34% have given their support to the transaction and undertaken to vote their shares in favor thereof. These shareholders include management of Spectrum, funds managed by Altor Fund IV and Gross Management AS (investment company of Spectrum director Glen Ole Rødland. Altor Fund IV (via Pål Stampe as chairman of the board and Maria Tallaksen as board member) and Gross Management AS (Glen Ole Rødland as board member) are represented on the Board of Directors of Spectrum. The above support and undertakings remain subject to consummation of definitive merger documentation.

 

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