TGS and PGS merger receives clearance from Norwegian competition authority

TGS ASA and PGS ASA have received clearance from the Norwegian Competition Authority (NCA) for their merger, marking a significant step toward creating a premier full-service energy data company. This approval is part of ongoing regulatory reviews, with the merger still pending approval from the UK Competition Market Authority (CMA), which is expected to conclude its phase I review by 11 June 2024.

The merger, first announced on 18 September 2023, aims to combine TGS’s and PGS’s resources to enhance their capabilities in geophysical data services. The agreed merger consideration will grant PGS shareholders 0.06829 ordinary shares of TGS for each PGS share they hold. Following the merger, TGS and PGS shareholders will own approximately 2/3 and 1/3 of the combined company, respectively. This strategic alignment is anticipated to foster significant cost synergies, preliminarily estimated to exceed USD 50 million annually.

Post-merger, the combined entity will expand its data offerings, including Multi-Client data, streamer data acquisition, and ocean bottom node (OBN) data acquisition. The merger is expected to mitigate supply chain risks and enhance operational efficiencies, positioning the new company as a global leader in data acquisition with an operational fleet of seven 3D data acquisition vessels.

The merger has received strong support from the boards of both companies. Kristian Johansen, CEO of TGS, will continue his role post-merger, along with Sven Børre Larsen as CFO. Johansen expressed satisfaction with the NCA’s decision, stating, “TGS has had a good dialogue with the Norwegian Competition Authority since the announcement of the transaction and is pleased to have received the required clearance today.” Rune Olav Pedersen, President & CEO of PGS, also welcomed the approval, noting the thorough assessment conducted by the NCA.

The merger remains subject to several closing conditions, including further regulatory approvals and final shareholder consent, which has already been secured.

The companies are working towards completing the merger in the second quarter of 2024. The statutory creditor notice period has expired, removing another hurdle towards finalizing the transaction.

The merger between TGS and PGS is poised to transform the landscape of geophysical data services by combining the strengths of both companies into a single, more competitive entity. The energy sector watches closely as the companies move towards finalizing the merger, pending further regulatory approvals.