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    CGG and Veritas DGC to merge

    News // September 5, 2006

    Compagnie Générale de Géophysique and Veritas DGC Inc have announced that they have entered into a definitive merger agreement whereby CGG will acquire Veritas in a part cash, part stock transaction.

    Based on CGG’s American Depositary Shares and Veritas’ shares closing prices on the NYSE on August 29th of US$33.33 and US$56.16 respectively:

    • CGG will offer Veritas stockholders, subject to proration, the choice of receiving 2.2501 CGG ADSs with respect to 51 per cent of Veritas’ shares or US$75.00 in cash with respect to 49 per cent of Veritas’ shares.
    • The aggregate value of the transaction is approximately US$3.1 billion, an implied premium of 34.7 per cent over Veritas’ 30-day average closing price of US$55.69 for the period ending on August 29, 2006.
    • Shareholders of the combined group will benefit from holding a world class seismic stock.
    • The transaction features strong business, geographic and client fit, with expected pre-tax run rate synergies estimated by CGG at approximately US$65 million per annum.
    • The transaction is expected by CGG to be accretive to earnings per share in 2008 and approximately neutral in 2007 to cash earnings  per share.
    • Boards of Directors of both companies have unanimously approved the transaction.
    • Following shareholder and regulatory approvals, the combined group will operate under the name CGG-Veritas.

    The combined seismic services will operate the world’s leading seismic fleet with 20 vessels, including 14 high capacity 3-D vessels, and land crews operating with equivalent capacity in both the Western and Eastern hemispheres.

    The Board of Directors of Veritas has unanimously approved the agreement and will recommend that Veritas stockholders adopt the transaction. Similarly, the Board of Directors of CGG has also unanimously approved the agreement and will recommend that CGG’s shareholders approve the issuance of new CGG stock to the Veritas shareholders. 

    The transaction is expected to be completed around the end of 2006, subject to receipt of shareholder and regulatory approvals, as well as the satisfaction of other customary closing conditions.


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