PARIS and HOUSTON, Texas, September 5 /PRNewswire-FirstCall/ --
Compagnie Generale de Geophysique ("CGG", ISIN: 0000120164 - NYSE:
GGY) and Veritas DGC Inc. ("Veritas", NYSE: VTS) announced today
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 ("ADSs") and Veritas'
shares closing prices on the NYSE on August 29, 2006 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% of Veritas' shares or US$75.00 in cash with respect
to 49% of Veritas' shares; - The aggregate value of the transaction
is approximately US$3.1 billion, an implied premium of 34.7% 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[1] per share; -
Boards of Directors of both companies have unanimously approved the
transaction; and - Following shareholder and regulatory approvals,
the combined group will operate under the name "CGG-Veritas". The
combination of CGG and Veritas will create a strong global pure
play seismic company, offering a broad range of seismic services,
and geophysical equipment, through Sercel, to the industry across
all markets. The combined seismic services will operate the world's
leading seismic fleet with 20 vessels, including 14 high capacity
3D vessels, and land crews operating with equivalent capacity in
both the Western and Eastern hemispheres. The multi-client services
will benefit from two complementary, recent vintage, well
positioned seismic data libraries. In data processing and imaging,
CGG's and Veritas' respective positions will combine to create the
industry reference. With a combined workforce of approximately
7,000 staff operating worldwide, including Sercel, the future group
will provide, through continued innovation, the industry benchmark
for seismic technology and services to a broad base of customers
including independent, international and national oil companies.
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
year end 2006, subject to receipt of shareholder and regulatory
approvals, as well as the satisfaction of other customary closing
conditions. CGG's Chairman and CEO, Robert Brunck commented: "We
are very enthusiastic about the business potential of CGG and
Veritas being combined. CGG-Veritas will be a leading global
seismic company and the only pure play listed investment
opportunity of this scale in the seismic sector. Because of our
many complementarities, with all its multidisciplinary and talented
personnel, and the strongest asset base in the sector, the future
group will constitute an excellent platform to maximize the value
of our respective businesses and technologies. In the context of
the seismic sector benefiting from solid fundamentals, as
illustrated by our excellent first half financial performance, and
with the current growth cycle expected to remain strong and
lasting, this transaction will create value to the shareholders of
both CGG and Veritas." Veritas' Chairman and CEO, Thierry Pilenko
commented: "This transaction presents our combined companies with a
tremendous opportunity. Together, the talent of our people, the
strength of our technology and technique, our leading edge
acquisition capabilities, state-of-the-art proprietary imaging
technology and high quality data library assets will enable
CGG-Veritas to better serve our customers and deliver superior
returns to our investors. Our operations and strategy are very well
aligned and I am very excited about the combination of our
companies. I look forward to working with Robert Brunck to
facilitate the integration of these two outstanding companies".
Under the terms of the merger agreement: - The total consideration
for the shares of Veritas is fixed at approximately US$1.5 billion
in cash and approximately 47 million CGG ADSs, not including cash
paid in respect of employee stock options in the transaction.
Veritas shareholders will have the right to elect cash or CGG ADSs,
subject to proration if either cash or stock is oversubscribed. The
cash consideration will be financed through debt financing fully
committed by Credit Suisse. - While the per-share consideration is
initially set in the merger agreement at $75.00 in cash or 2.2501
CGG ADSs, the per-share consideration is subject to adjustment
upwards or downwards so that each Veritas share receives
consideration representing equal value. This adjustment will,
however, not increase or decrease the total amount of cash or the
total number of ADSs to be issued in the transaction. - The current
value of the transaction to Veritas shareholders, based on August
29, 2006 closing price of the CGG's ADSs on the NYSE (US$33.33), is
approximately US$3.1 billion. This represents a 33.5% premium over
Veritas' closing stock price on the NYSE of US$56.16 on August 29,
2006 and a 34.7% premium over Veritas' 30-trading day average
closing price of US$55.69 for the period ending on the NYSE on
August 29, 2006. - The resulting shareholding of CGG-Veritas should
be held approximately 65% by CGG's shareholders and 35% by Veritas'
shareholders. - Based on the two companies' strong businesses,
geographic and client fit, expected pre-tax run rate synergies are
estimated by CGG at approximately US$65 million per annum. Based on
CGG's estimates, the transaction is expected to be accretive to
earnings per share in CY2008 and approximately neutral to cash
earnings per share in CY2007. In terms of gearing, CGG is confident
the combined group's anticipated cash flows characteristics will
provide significant debt amortization capacity which should allow
it to maintain its current credit profile. The new Board of
Directors is expected to reflect the combined shareholder base with
Robert Brunck as Chairman and CEO. Thierry Pilenko, currently
Chairman and CEO of Veritas, will be proposed for appointment as
one of the combined company's new Board Directors. After the
merger, Geophysical Services will be headed by CGG's Christophe
Pettenati-Auziere, President Geophysical Services, reporting to him
will be Timothy L. Wells, President Western Hemisphere and Luc
Benoit-Cattin, President Eastern Hemisphere. Mr. Pettenati-Auziere
is currently President, Geophysical Services of CGG, Mr.
Benoit-Cattin is currently Executive Vice President, Offshore of
CGG and Mr. Wells is currently President and COO of Veritas. The
conduct of Sercel's business will be unchanged in the context of
this transaction. Credit Suisse and Rothschild are acting as
financial advisors to CGG. Skadden, Arps, Slate, Meagher & Flom
LLP, Willkie Farr & Gallagher LLP, Linklaters and Goodmans LLP
are acting as legal advisors to CGG. Goldman Sachs is acting as
financial advisor to Veritas. Vinson & Elkins LLP and Paul,
Hastings, Janofsky & Walker (Europe) LLP are acting as legal
advisors to Veritas. About Veritas: Veritas DGC, Inc.
(http://www.veritasdgc.com/), headquartered in Houston, Texas, is a
leading provider of integrated geophysical information and services
to the petroleum industry worldwide. Veritas is listed on New York
Stock Exchange under the ticker code VTS. About CGG: CGG
(http://www.cgg.com/) is a global participant in the oilfield
services industry, providing a wide range of seismic data
acquisition, processing and reservoir services to clients in the
oil and gas exploration and production business. It is also a
global manufacturer of geophysical equipment through its subsidiary
Sercel. CGG is listed on the Eurolist of Euronext Paris SA (ISIN:
0000120164 - NYSE: GGY) and the New York Stock Exchange (under the
form of American Depositary Shares, NYSE: GGY). Today, CGG also
published a separate press release relating to its Q2 2006
financial results which is also available on the company's website
(http://www.cgg.com/). Contact Investors: CGG Veritas Christophe
Barnini Mindy Ingle +33-1-64-47-38-11/38-10 +1-(832)-351-8821
Email: Internet: http://www.cgg.com/ Internet:
http://www.veritasdgc.com/ Contact Press: CGG In New York: Nina
Devlin Brunswick Group +1-(212)-333-3810 Today, September 5th 2006,
Robert Brunck, CGG's Chairman and CEO, will comment on this
transaction and the Q2/H1 CGG financial results during a public
presentation at 11:30 am (Paris time) - at Palais Brongniart -
Place de la Bourse (entry in front of Ndegrees40 rue Notre Dame des
Victoires) PARIS 2nd. A conference call in French is scheduled at
3:00 pm (Paris time) - 8:00 am (US CT) - 9:00 am (US ET). Robert
Brunck, CGG's Chairman and CEO, will comment on the transaction and
the Q2/H1 CGG financial results. To take part in the conference,
simply dial five to ten minutes prior to the scheduled start time
and download from the http://www.cgg.com/ website the presentation
which will be used during the call - French Call-in
(33)-1-70-99-32-12 - International: (+44)-20-7162-0125 An English
language conference call is scheduled at 4:30 pm (Paris time) -
9:30 am (US CT) - 10:30 am (US ET). Robert Brunck, CGG's Chairman
and CEO, will comment on the Q2/H1 CGG results and will be joined
by Thierry Pilenko, Veritas' Chairman and CEO, to comment on the
transaction. To take part in the English language conference,
simply dial five to ten minutes prior to the scheduled start time
and download from the http://www.cgg.com/ website the presentation
which will be used during the call - International call-in
(719)-457-2629 - US call-in (800)-967-7140 Both conferences will be
broadcast live on CGG's website http://www.cgg.com/ and replays
will be available a week later. CAUTIONARY LANGUAGE REGARDING
FORWARD LOOKING STATEMENTS This document contains or incorporates
by reference statements regarding the proposed transaction between
Veritas and CGG, and may contain or incorporate by reference
statements regarding the expected timetable for completing the
transaction, future financial and operating results, benefits and
synergies of the proposed transaction and other statements about
CGG's management's future expectations, beliefs, goals, plans or
prospects that are based on current expectations and estimates
about Veritas and CGG and the combined group, as well as Veritas'
and CGG's and the combined group's future performance and the
industries in which Veritas and CGG operate and the combined group
will operate, in addition to managements' assumptions. Words such
as "expects," "anticipates," "targets," "goals," "projects,"
"intends," "plans," "believes," "seeks," "estimates," variations of
such words and similar expressions are intended to identify such
forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act, which are not statements of
historical facts. These forward-looking statements are not
guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to assess.
Therefore, actual outcomes and results may differ materially from
what is expressed or forecast in such forward-looking statements.
These risks and uncertainties are based upon a number of important
factors including, among others: the ability to consummate the
proposed transaction; the failure of CGG shareholders to approve
the issuance of CGG common shares for the merger or the failure of
Veritas shareholders to adopt the merger agreement; difficulties
and delays in obtaining regulatory approvals for the proposed
transaction; the risks that synergies and cost savings from the
merger may not be fully realized or take longer to realize than
expected; potential difficulties in meeting conditions set forth in
the merger agreement; changes in international economic and
political conditions, and in particular in oil and gas prices; our
ability to reduce costs; our ability to finance the cash portion of
the merger consideration and our operations on acceptable terms;
the timely development and acceptance of our new products and
services; the effects of competition; political, legal and other
developments in foreign countries; the timing and extent of changes
in exchange rates for non-U.S. currencies and interest rates; the
accuracy of our assessment of risks related to acquisitions,
projects and contracts, and whether these risks materialize; our
ability to integrate successfully the businesses or assets we
acquire; our ability to sell our seismic data library; and our
ability to access the debt and equity markets during the periods
covered by the forward-looking statements, which will depend on
general market conditions and on our credit ratings for our debt
obligations. Additional factors that may affect future results are
contained in CGG's and Veritas' filings with the U.S. Securities
and Exchange Commission (the "SEC") and similar filings by Veritas
with Canadian securities regulators. Except to the extent required
under applicable laws and the rules and regulations of applicable
securities regulators (including the SEC), neither CGG nor Veritas
is under any obligation, and each expressly disclaims any
obligation, to update, alter or otherwise revise any
forward-looking statements, whether as a result of new information,
future events, developments, changes in assumptions or otherwise.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC AND
SECURITIES REGULATORS IN CANADA AND SUBMITTED TO THE APPROVAL OF
THE AMF In connection with their proposed combination, CGG and
Veritas intend to file relevant materials with the SEC and, in the
case of Veritas, with Canadian securities regulators, including the
filing by CGG of a Registration Statement on Form F-6 and a
Registration Statement on Form F-4 (collectively, the "Registration
Statements"), which will include a preliminary prospectus and
related materials to register with the SEC the CGG American
Depositary Shares ("ADSs"), as well as the CGG ordinary shares
underlying such CGG ADSs, to be issued to holders of Veritas common
shares and convertible debt, and Veritas and CGG plan to file with
the SEC and with Canadian securities regulators and mail to their
respective stockholders a proxy statement/prospectus relating to
the proposed transaction. In connection with the proposed
combination of CGG and Veritas and the admission to trading on
Eurolist by Euronext Paris of the new CGG shares to be issued in
exchange for Veritas common shares and convertible debt, CGG
intends to submit a prospectus (the "French Prospectus"), comprised
of CGG's registration document (document de reference) and a note
d'operation, to the approval (visa) of the French AMF. The
Registration Statements, the joint proxy statement/prospectus and
the French Prospectus will contain important information about CGG,
Veritas, the proposed combination, certain risks and related
matters. Investors and security holders are urged to read the
Registration Statements, the proxy statement/prospectus and the
French Prospectus (and any amendments or supplements to them)
carefully when they are available. Investors and security holders
will be able to obtain free copies of the Registration Statements
and the proxy statement/prospectus and other documents filed with
the SEC by Veritas and CGG through the web site maintained by the
SEC at http://www.sec.gov/ and through the website maintained by
Canadian securities regulators at http://www.sedar.com/, and the
French Prospectus, subject to the approval (visa) by the AMF and
when available, through the web site maintained by the AMF at
http://www.amf-france.org/. In addition, investors and security
holders will be able to obtain free copies of the Registration
Statements, the proxy statement/prospectus, and, subject to the
approval (visa) by the AMF, the French Prospectus, when they become
available from CGG by contacting or by telephone at
+33-1-64-47-38-31. Veritas, CGG and their respective directors and
executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies in
connection with the proposed merger. Information regarding CGG's
directors and executive officers is available in CGG's Form 20-F
filed with the SEC on May 9, 2006 and in CGG's registration
document (document de reference) filed with the AMF on the same
date. Information regarding Veritas directors and executive
officers can be found in Veritas' proxy statement for its 2005
Annual Meeting of Stockholders, which was filed with the SEC on
October 28, 2005 and with the Canadian securities regulators on
November 4, 2005, and its 2005 annual report on Form 10-K filed
with the SEC on October 12, 2005 and with the Canadian securities
regulators on October 18, 2005. These documents are available free
of charge at the SEC's web site at http://www.sec.gov/ and at
http://www.sedar.com/ or at the AMF's website at
http://www.amf-france.org/. In addition, investors and security
holders will be able to obtain free copies of these documents from
CGG by contacting or by telephone at +33-1-64-47-38-31. Additional
information regarding the interests of such potential participants
in the transaction described herein will be included in the
Registration Statements and proxy statement/prospectus described
above and other relevant materials filed with the SEC and the
Canadian securities regulators, when they become available. [1]
Earnings before implementation cost of synergies, transaction costs
and impact of purchase accounting DATASOURCE: Geophysique CONTACT:
CGG, Christophe Barnini, +33-1-64-47-38-11/38-10, Email: , In New
York: Nina Devlin, Brunswick Group, +1-(212)-333-3810, Veritas,
Mindy Ingle, +1-(832)-351-8821
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