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Geophysique to Buy Veritas

September 06, 2006|From the Associated Press

French oil and gas field surveyor Compagnie Generale de Geophysique plans to buy U.S. rival Veritas DGC Inc. for $3.1 billion in cash and stock, the companies announced Tuesday, establishing a major new global player in the booming oil exploration industry.

Geophysique and Houston-based Veritas said both boards had unanimously approved the deal to create CGG-Veritas.

Oil exploration service companies are doing strong business around the world amid broadly rising demand for oil and pressure on reserves.

In their joint statement, the companies said the combination of their seismic data libraries, processing and imaging tools would "create the industry reference," with a combined workforce of 7,000.

The offer, just over half of which is in Geophysique stock, values Veritas shares at $75 -- a 21% premium to their Friday closing price of $62.18.

Shares of Geophysique fell 8% to 122.70 euros ($157.69) in Paris. Veritas shares rose $7.89 to $70.07 in New York.

The deal raised expectations that consolidation could follow among other oil and gas surveyors.

The deal is expected to be completed by the end of the year, subject to regulatory approval on both sides of the Atlantic and a vote by Geophysique shareholders in December, the companies said.

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