Source Pravda.Ru

PGS May Have To Cut Price For Merger

Petroleum Geo-Services, the world's second largest mapper of oil reserves, will probably need to lower the price it seeks from Houston-based rival Veritas DGC a second time to allow a combination to proceed, analysts have said.

PGS cut its valuation in April to facilitate the merger, which is delayed by a pending asset sale. Its stock has slid by as much sixty eight percent this year, to a nine and a half year low in Oslo, valuing the company at 2.28 billion kroner ($298 million). Its American depositary receipts fell to a record low in New York June 11th.

“I think Veritas is committed to the merger if they are able to renegotiate the structure of the transaction,” said Scott Keller, head of Dealanalytics.com, a New York firm that analyzes mergers and acquisitions. “PGS shareholders may have to accept some 10 percent in value reduction.”

PGS agreed to cut its stake in the combined company to fifty six percent from a previous sixty percent, according to the initial merger terms. PGS will need to sell new shares or assets to stay afloat if the merger or pending asset sale collapses, analysts have said.

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