Technip Bids for CGG -- Update

By Inti Landauro and Selina Williams 

PARIS--France's Technip SA has made a preliminary takeover offer of EUR1.46 billion ($1.83 billion) in cash for smaller French oil-services company CGG, a sign of accelerating consolidation in the sector as falling oil prices have crimped spending by big oil groups.

CGG, a Paris-listed specialist exploration company, said it has rejected the offer. "Conditions to pursue [the approach] weren't met," the company said in a statement Thursday.

The move by Technip comes just days after U.S. giant Halliburton Co. announced plans to buy small rival Baker Hughes Inc. in a deal valued at $34.6 billion, prompting speculation that more deals in the sector were in the offing.

The industry's main players are rushing into swallowing smaller rivals to mitigate the effects of falling oil prices on their business, which comprises providing equipment such as rigs, drill parts and tools, as well as the engineering for pipelines and projects. As oil prices have fallen to below $80 a barrel from more than $100 a barrel earlier this year, major oil companies have shelved expansion plans for multibillion-dollar projects and shed operations with thin profit margins.

Technip provides an array of services from offshore drilling equipment to oil refining, while CGG focuses on seismic studies and other techniques to help energy companies locate oil and gas reserves.

The combined group would employ around 50,000 people with revenue of around EUR13 billion.

Technip, which said it first approached CGG on Nov. 10, has offered EUR8.3 a share in cash, a premium of 27% over CGG's closing share price Wednesday.

CGG shares shot up more than 22% in early trading, but at EUR7.91, they were trading below Technip's offer price. Shares of Technip were down 4.3%.

Write to Inti Landauro at [e-mail]

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