CGG SAID TO WEIGH SALE AFTER BID BY TECHNIP: Bberg and
Le Figaro report that TEC (advised by Credit Agricole and Deutsche Bank) and
CGG (advised by Credit Suisse) held talks, but CGG would have rejected a bid
approach by TEC as i) price was too low and ii) TEC wants CGG to sell all its
boats (talks would be ongoing acc to Bloomberg).
OUR VIEW: Very surprising on industrial standpoint: we don't see TEC accepting
to buy CGG's boats if CGG doesn't want to sell all of them. Seismic is worst
biz in Oil Services while Technip has a good track record in capital allocation
(Stone & Webster, Subsea ,upstream in US, discplined in Onshore). We don't see
Pilenko (TEC's CEO) going for such a risky deal (CGG EV @ €3.1b o/w €2bn of
debt) and he knows Seismic well (was head of Veritas when CGG bought it in
2006). Clearly, political motivation must explain big part of this move (as
mentionned by the press, quoting sources): French State owns 7% of CGG and 5%
of TEC w/ the idea to save CGG and create a National Champion. Looking at CGG 3
div: Marine (-ve value), Sercel (losing steam) & GGR, only Reservoir
Characterization could make sense (Sercel is a question mark)
==> Expect massive jump on CGG today. Note CGG's'ADR went up 25%ish vs Paris' close level
==> Technip. Clearly not good news if confirmed.