Schlumberger Looking to Sell Distribution Business

Oilfield services provider Schlumberger (NYSE:SLB) is reportedly looking for buyers for its distributions business that provides oilfield supplies. Schlumberger acquired the distribution business as a part of its Smith acquisition in 2010. The sale is expected to raise the company around $800 million. ^[1] We cover the distribution business along with the other activities in the company’s Distributions, Eliminations and Others business of the company. Schlumberger and other oilfield services players like Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI) expanded by taking over other smaller players in 2010.

We have a $100 price estimate for Schlumberger, which is 35% premium to its current market price.

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Distribution business

Schlumberger gained a 56% stake in CE Franklin and inherited the operations of Wilson International as a part of its $11 billion acquisition of Smith. ^[1] Schlumberger is exploring options to sell its business unit that includes CE Franklin for around $800 million. The company is believed to have roped in Goldman Sachs to find potential buyers for this unit. Bloomberg reported that competitors as well private equity firms had shown interest in purchasing its stake in the company.

Schlumberger’s distribution business provides tools such as pipes, valves and other products to customers in the energy and industrial markets. The business also provides related services such as warehouse management, inventory management services and vendor integration to its client. A sale of the company’s interests in the business will lower its revenues but not impact its leading position in the overall oilfield services business.

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1. Schlumberger Is Said to Seek Buyer for Oilfield-Supply Business, Bloomberg [↩] [↩]