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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-207260


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LOGO

MERGER PROPOSAL—YOUR VOTE IS VERY IMPORTANT

 

 

To the Stockholders of Cameron International Corporation:

We cordially invite you to attend a special meeting of stockholders of Cameron International Corporation, which we refer to as Cameron, to be held on Thursday, December 17, 2015, at Cameron’s corporate headquarters, 1333 West Loop South, Suite 1700, Houston, Texas 77027, commencing at 10:00 a.m. local time. As previously announced, Cameron, Schlumberger Limited (Schlumberger N.V.), which we refer to as Schlumberger, and Schlumberger Holdings Corporation, which we refer to as Schlumberger US, have entered into an Agreement and Plan of Merger, dated as of August 25, 2015, which we refer to as the merger agreement. Pursuant to the terms of the merger agreement, a subsidiary of Schlumberger US will merge with and into Cameron, which we refer to as the merger, with Cameron surviving the merger as a direct wholly-owned subsidiary of Schlumberger US.

If the merger is completed, holders of Cameron common stock will be entitled to receive 0.716 shares of Schlumberger common stock and $14.44 in cash, without interest, together with cash in lieu of fractional shares, which we refer to as the merger consideration, for each share of Cameron common stock that they own. Based on the closing price of Schlumberger common stock on the New York Stock Exchange, which we refer to as the NYSE, on August 25, 2015, the last trading day before the public announcement of the merger agreement, the merger consideration represented approximately $66.36 in value per share of Cameron common stock. This amount represented a premium of approximately 56.3% to the closing price of Cameron common stock on the NYSE on August 25, 2015. Based on the closing price of Schlumberger common stock on the NYSE on November 13, 2015, the most recent practicable trading day before the date of this proxy statement/prospectus, the merger consideration represented approximately $68.96 per share of Cameron common stock. Schlumberger common stock is listed on the NYSE under the trading symbol “SLB,” and Cameron common stock is listed on the NYSE under the trading symbol “CAM.” We encourage you to obtain quotes for the Schlumberger common stock, given that part of the merger consideration is payable in Schlumberger common stock, and Cameron common stock.

Under the General Corporation Law of the State of Delaware, the approval of Cameron stockholders must be obtained before effecting the merger and the other transactions contemplated by the merger agreement. Based on the estimated number of shares of Cameron common stock and Schlumberger common stock that will be outstanding immediately prior to the closing of the merger, we estimate that, upon closing, existing Schlumberger stockholders will own approximately 90% of the outstanding shares of Schlumberger common stock and former Cameron stockholders will own approximately 10% of the outstanding shares of Schlumberger common stock.

At the special meeting, Cameron stockholders will be asked to vote on (1) a proposal to adopt the merger agreement; (2) a proposal to approve, by non-binding, advisory vote, the compensation that may become payable to Cameron’s named executive officers in connection with the merger; and (3) a proposal to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the proposal to adopt the merger agreement at the time of the special meeting. The merger cannot be completed unless the holders of at least a majority of the outstanding shares of Cameron common stock entitled to vote on the matter at the special meeting vote to approve the proposal to adopt the merger agreement. A FAILURE TO VOTE, A BROKER NON-VOTE OR AN ABSTENTION WILL HAVE THE SAME EFFECT AS A VOTE “AGAINST” THE PROPOSAL TO ADOPT THE MERGER AGREEMENT. The advisory proposal concerning the compensation that may become payable to Cameron’s named executive officers in connection with the merger and the proposal to adjourn the special meeting, if necessary, to solicit additional proxies each require the affirmative vote of the holders of a majority of the shares of Cameron common stock represented at the special meeting and entitled to vote on such proposal. With respect to the advisory proposal concerning the compensation that may become payable to Cameron’s named executive officers in connection with the merger and the proposal to adjourn the special meeting, if necessary, to solicit additional proxies, a failure to vote or a broker non-vote will have no effect on the outcome of such proposals (assuming that a quorum is present, in the case of the advisory compensation proposal), but a vote to abstain will have the same effect as a vote cast “AGAINST” these proposals.

We cannot complete the merger unless the Cameron stockholders approve the proposal to adopt the merger agreement. The merger is not conditioned on approval of the advisory proposal concerning the compensation that may become payable to Cameron’s named executive officers in connection with the merger or the proposal to adjourn the special meeting, if necessary, to solicit additional proxies. Your vote is very important, regardless of the number of shares you own. Whether or not you expect to attend the special meeting in person, please submit a proxy to vote your shares as promptly as possible so that your shares may be represented and voted at the special meeting.

The Cameron board of directors has unanimously approved and declared advisable the merger agreement, the merger and all of the other transactions contemplated by the merger agreement, declared that it is in the best interests of Cameron and its stockholders to enter into the merger agreement and consummate the merger and all of the other transactions contemplated by the merger agreement, directed that the adoption of the merger agreement be submitted to a vote at a meeting of the Cameron stockholders, and recommended that the Cameron stockholders vote to adopt the merger agreement. ACCORDINGLY, THE CAMERON BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSAL TO ADOPT THE MERGER AGREEMENT, A VOTE “FOR” THE ADVISORY PROPOSAL CONCERNING THE COMPENSATION THAT MAY BECOME PAYABLE TO CAMERON’S NAMED EXECUTIVE OFFICERS IN CONNECTION WITH THE MERGER AND A VOTE “FOR” THE PROPOSAL TO ADJOURN THE SPECIAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES. In considering the recommendation of the Cameron board of directors, you should be aware that certain directors and executive officers of Cameron will have interests in the merger that may be different from, or in addition to, the interests of Cameron stockholders generally. See the section entitled “The Merger—Interests of Cameron’s Directors and Executive Officers in the Merger” beginning on page 63 of this proxy statement/prospectus.

The obligations of Cameron and Schlumberger to complete the merger are subject to the satisfaction or waiver of several conditions set forth in the merger agreement. More information about Cameron, Schlumberger and the merger is contained in this proxy statement/prospectus. Before voting, we urge you to read carefully and in their entirety the accompanying proxy statement/prospectus, including the Annexes and the documents incorporated by reference. In particular, we urge you to read carefully the section entitled “Risk Factors” beginning on page 26 of this proxy statement/prospectus. If you have any questions regarding this proxy statement/prospectus, you may contact D.F. King & Co., Inc., Cameron’s proxy solicitor, by calling toll-free at (866) 751-6312.

Thank you for your continued support of and interest in Cameron. We at Cameron look forward to the successful combination of Cameron and Schlumberger.

Very truly yours,

 

LOGO

Jack B. Moore

Chairman of the Board

Cameron International Corporation

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this proxy statement/prospectus or determined if this proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated November 16, 2015 and is first being mailed to Cameron stockholders on or about November 17, 2015.


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REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about Schlumberger and Cameron from other documents that are not included in or delivered with this proxy statement/prospectus. This information is available to you without charge. You can obtain copies of the documents incorporated by reference into this proxy statement/prospectus through the Securities and Exchange Commission (sometimes referred to as the SEC) website at www.sec.gov or by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:

 

Schlumberger Limited

5599 San Felipe, 17th Floor

Houston, Texas 77056

Investor Relations

(713) 375-3535

 

Cameron International Corporation

1333 West Loop South, Suite 1700

Houston, TX 77027

Corporate Secretary

(713) 513-3300

In addition, you may also obtain additional copies of this proxy statement/prospectus or the documents incorporated by reference into this proxy statement/prospectus by contacting D.F. King & Co., Inc., Cameron’s proxy solicitor, at the address and telephone numbers listed below. You will not be charged for any of these documents that you request.

D.F. KING & CO., INC.

48 Wall Street, 22nd Floor

New York, NY 10005

Banks and Brokers Call Collect: (212) 493-3910

All Others Please Call Toll-Free: (866) 751-6312

To obtain timely delivery of documents, you must request them no later than five business days before the date of the special meeting. Therefore, if you would like to request documents from Cameron, please do so by December 10, 2015, in order to receive them before the special meeting.

See “Where You Can Find More Information” beginning on page 128 of this proxy statement/prospectus.

SUBMITTING PROXIES BY MAIL, TELEPHONE OR INTERNET

Cameron stockholders of record may submit their proxies:

 

    by telephone (within the United States, US territories and Canada) using the toll-free telephone number listed on the enclosed proxy card;

 

    through the Internet by logging onto the website indicated on the enclosed proxy card and following the prompts using the Control Number located on the proxy card; or

 

    by mail, by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided:

Stockholders of Cameron whose shares are held in “street name” must provide their broker, nominee, fiduciary or other custodian with instructions on how to vote their shares; otherwise, their broker, nominee, fiduciary or other custodian will not vote their shares on any of the proposals before the special meeting. Stockholders of Cameron should check the voting form provided by their broker, nominee, fiduciary or other custodian for instructions on how to vote their shares.


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LOGO

1333 West Loop South, Suite 1700

Houston, Texas 77027

(713) 513-3300

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON DECEMBER 17, 2015

To the Stockholders of Cameron International Corporation:

You are cordially invited to a special meeting of stockholders of Cameron International Corporation, which we refer to as Cameron, which will be held at Cameron’s corporate headquarters, 1333 West Loop South, Suite 1700, Houston, Texas 77027, on Thursday, December 17, 2015, at 10:00 a.m. local time, for the following purposes:

 

  1. to vote on a proposal to adopt the Agreement and Plan of Merger, which we refer to as the merger agreement, dated as of August 25, 2015, as may be amended from time to time, among Schlumberger Holdings Corporation, an indirect wholly-owned subsidiary of Schlumberger Limited, Rain Merger Sub LLC, a direct wholly-owned subsidiary of Schlumberger Holdings Corporation, Schlumberger Limited (Schlumberger N.V.), which we refer to as Schlumberger, and Cameron, a copy of which is included as Annex A to the proxy statement/prospectus of which this notice forms a part;

 

  2. to vote on a proposal to approve, by non-binding, advisory vote, the compensation that may become payable to Cameron’s named executive officers in connection with the merger; and

 

  3. to vote on a proposal to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the proposal to adopt the merger agreement at the time of the special meeting.

Your proxy is being solicited by the Cameron board of directors. The Cameron board of directors has unanimously approved and declared advisable the merger agreement, the merger and all of the other transactions contemplated by the merger agreement, declared that it is in the best interests of Cameron and its stockholders to enter into the merger agreement and consummate the merger and all of the other transactions contemplated by the merger agreement, directed that the adoption of the merger agreement be submitted to a vote at a meeting of the Cameron stockholders, and recommended that the Cameron stockholders vote to adopt the merger agreement. ACCORDINGLY, THE CAMERON BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSAL TO ADOPT THE MERGER AGREEMENT, A VOTE “FOR” THE ADVISORY PROPOSAL CONCERNING THE COMPENSATION THAT MAY BECOME PAYABLE TO CAMERON’S NAMED EXECUTIVE OFFICERS IN CONNECTION WITH THE MERGER AND A VOTE “FOR” THE PROPOSAL TO ADJOURN THE SPECIAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES.

The Cameron board of directors has fixed the close of business on November 16, 2015 as the record date for determination of Cameron stockholders entitled to receive notice of, and to vote at, the special meeting or any adjournments or postponements thereof. Only holders of record of issued and outstanding Cameron common stock at the close of business on the record date are entitled to receive notice of, and to vote at, the special meeting or any adjournments or postponements thereof. The merger cannot be completed unless the holders of at least a majority of the outstanding shares of Cameron common stock entitled to vote on the matter at the special meeting vote to approve the proposal to adopt the merger agreement. A FAILURE TO VOTE, A BROKER NON-VOTE OR AN ABSTENTION, WILL HAVE THE SAME EFFECT AS A VOTE “AGAINST” THE PROPOSAL TO ADOPT THE MERGER AGREEMENT. The advisory proposal concerning the compensation that may become payable to Cameron’s named executive officers in connection with the merger and the proposal to adjourn the special meeting, if necessary, to solicit additional proxies each require the


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affirmative vote of the holders of a majority of the shares of Cameron common stock represented at the special meeting and entitled to vote on such proposal. With respect to the advisory proposal concerning the compensation that may become payable to Cameron’s named executive officers in connection with the merger and the proposal to adjourn the special meeting, if necessary, to solicit additional proxies, a failure to vote or a broker non-vote will have no effect on the outcome of such proposals (assuming that a quorum is present, in the case of the advisory compensation proposal), but a vote to abstain will have the same effect as a vote cast “AGAINST” these proposals.

Your vote is very important. Whether or not you plan to attend the meeting in person, we urge you to vote by Internet, telephone or mail to ensure that your shares are represented at the meeting. Registered stockholders may vote in person at the special meeting or by proxy, in one of three ways: (1) through the Internet by logging onto the website indicated on the enclosed proxy card and following the prompts using the Control Number located on the proxy card; (2) by telephone (within the United States, US territories and Canada) using the toll-free telephone number listed on the enclosed proxy card; or (3) by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If your shares are held in the name of a bank, broker, trust company or other nominee, follow the instructions you receive from your nominee on how to vote your shares.

A government-issued picture identification will be required to enter the special meeting. If you are the representative of a corporate or institutional stockholder, you must present valid photo identification along with proof that you are the representative of such stockholder. If your shares are held by a bank, broker, trust company or other nominee, you will be required to present evidence of your ownership of shares, which you can obtain from your broker, bank, trust company or other nominee.

The enclosed proxy statement/prospectus provides a detailed description of the merger, the merger agreement and the other matters to be considered at the special meeting. We urge you to read this proxy statement/prospectus, including any documents incorporated by reference, and the Annexes carefully and in their entirety. If you have any questions regarding the accompanying proxy statement/prospectus, you may contact D.F. King & Co., Inc., Cameron’s proxy solicitor, by calling toll-free at (866) 751-6312.

Very truly yours,

 

LOGO

Grace B. Holmes

Vice President, Corporate Secretary

and Chief Governance Officer


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TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE CAMERON SPECIAL MEETING

     1   

SUMMARY

     10   

The Companies

     10   

The Merger

     11   

Special Meeting of Cameron Stockholders

     12   

Schlumberger Stockholder Approval Is Not Required

     13   

Share Ownership of Cameron’s Directors and Executive Officers

     13   

Treatment of Equity Awards

     13   

Opinion of Cameron’s Financial Advisor

     14   

Ownership of Schlumberger After the Merger

     14   

Interests of Cameron’s Directors and Executive Officers in the Merger

     15   

Listing of Schlumberger Stock and Delisting and Deregistration of Cameron Stock

     16   

Appraisal Rights

     16   

Completion of the Merger Is Subject to Certain Conditions

     16   

Regulatory Approvals Required for the Merger

     16   

No Solicitation by Cameron

     17   

Termination of the Merger Agreement

     18   

Termination Fee and Expenses

     19   

Payment of Dividends and Stock Repurchases

     19   

Rights of Cameron Stockholders Will Change as a Result of the Merger

     19   

Material U.S. Federal Income Tax Consequences of the Merger

     20   

Accounting Treatment

     20   

Litigation Relating to the Merger

     20   

Selected Historical Consolidated Financial Data of Schlumberger

     21   

Selected Historical Consolidated Financial Data of Cameron

     22   

Selected Unaudited Pro Forma Condensed Combined Financial Information

     23   

Comparative Per Share Data

     24   

Comparative Per Share Market Price And Dividend Information

     25   

RISK FACTORS

     26   

Risks Relating to the Merger

     26   

Risks Relating to the Combined Company Upon Completion of the Merger

     30   

Risks Relating to Schlumberger Common Stock Following the Merger

     32   

Other Risks Relating to Cameron and Schlumberger

     33   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     34   

THE COMPANIES

     36   

THE SPECIAL MEETING

     37   

PROPOSALS

     42   

THE MERGER

     44   

Background of the Merger

     44   

Cameron’s Reasons for the Merger; Recommendation of the Cameron Board of Directors

     50   

Schlumberger’s Reasons for the Merger

     54   

Opinion of Cameron’s Financial Advisor

     54   

Financial Forecasts

     60   

Interests of Cameron’s Directors and Executive Officers in the Merger

     63   

Advisory Vote on Merger-Related Compensation for Cameron’s Named Executive Officers

     66   

 

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(continued)

 

     Page  

Appraisal Rights

     68   

Listing of Schlumberger Stock and Delisting and Deregistration of Cameron Stock

     68   

Restrictions on Sales of Shares of Schlumberger Common Stock Received in the Merger

     68   

Accounting Treatment

     68   

Material U.S. Federal Income Tax Consequences

     69   

Regulatory Approvals Required for the Merger

     73   

Closing and Effective Time

     74   

Litigation Relating to the Merger

     75   

THE MERGER AGREEMENT

     76   

Representations, Warranties and Covenants in the Merger Agreement Are Not Intended to Function or Be Relied on as Public Disclosures

     76   

Structure of the Merger

     76   

Effective Time; Closing

     76   

Merger Consideration

     77   

Fractional Shares

     77   

Treatment of Equity Awards

     77   

Exchange of Shares; Stock Transfer Books

     78   

Lost, Stolen or Destroyed Certificates

     79   

Appraisal Rights

     79   

Withholding Taxes

     79   

Representations and Warranties

     79   

Conduct of Business Pending the Effective Time

     81   

Certain Additional Agreements

     84   

Conditions to the Merger

     89   

Termination, Amendment and Waiver

     90   

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     93   

COMPARISON OF STOCKHOLDER RIGHTS

     104   

APPRAISAL RIGHTS OF CAMERON STOCKHOLDERS

     116   

DESCRIPTION OF SCHLUMBERGER CAPITAL STOCK

     122   

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     125   

STOCKHOLDER PROPOSALS

     127   

EXPERTS

     127   

HOUSEHOLDING

     127   

LEGAL MATTERS

     128   

OTHER MATTERS

     128   

WHERE YOU CAN FIND MORE INFORMATION

     128   

LIST OF ANNEXES

  

Annex A—Agreement and Plan of Merger

     A-1   

Annex B—Section 262 of the General Corporation Law of the State of Delaware

     B-1   

Annex C—Opinion of Credit Suisse Securities (USA) LLC

     C-1   

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE CAMERON SPECIAL MEETING

The following are some questions that you, as a stockholder of Cameron, may have regarding the merger, the merger agreement and the special meeting, and brief answers to those questions. You are urged to read carefully this proxy statement/prospectus and the other documents referred to in this proxy statement/prospectus in their entirety because this section may not provide all of the information that is important to you with respect to the merger, the merger agreement and the special meeting. Additional important information is contained in the annexes to, and the documents incorporated by reference into, this proxy statement/prospectus. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by following the instructions under the section entitled “Where You Can Find More Information” beginning on page 128 of this proxy statement/prospectus.

 

Q: Why am I receiving this document?

 

A: You are receiving this document because you were a stockholder of record of Cameron on the record date for the special meeting. Schlumberger US, Schlumberger and Cameron have agreed to combine under the terms of the merger agreement that is described in this proxy statement/prospectus. A copy of the merger agreement is attached as Annex A.

This proxy statement/prospectus serves as the proxy statement through which Cameron will solicit proxies to obtain the necessary stockholder approval for the merger. It also serves as the prospectus by which Schlumberger will issue shares of Schlumberger common stock to pay the stock portion of the merger consideration.

In order to complete the merger, among other things, Cameron stockholders must approve the proposal to adopt the merger agreement. Cameron is holding the special meeting to ask its stockholders to vote on the proposal to adopt the merger agreement.

At the special meeting, Cameron stockholders will also be asked to vote on a proposal, by non-binding, advisory vote, concerning compensation that may become payable to Cameron’s named executive officers in connection with the merger and a proposal to adjourn the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the proposal to adopt the merger agreement at the time of the special meeting.

This document contains important information about the merger, the merger agreement and the special meeting, and you should read it carefully. The enclosed voting materials allow you to vote your shares without attending the special meeting.

 

Q: Does my vote matter?

 

A: Yes, your vote is very important. We encourage you to vote as soon as possible.

The merger cannot be completed unless the holders of at least a majority of the shares of Cameron common stock outstanding and entitled to vote on the matter at the special meeting vote to approve the proposal to adopt the merger agreement. If you fail to submit a proxy or vote in person at the special meeting, or vote to abstain, or you do not provide your bank, broker, trust company or other nominee with instructions, as applicable, this will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

 

Q: How many votes are required to approve each proposal?

 

A: The following votes are required to approve each proposal:

 

    The approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the shares of Cameron common stock outstanding and entitled to vote on such proposal.

 

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    The approval of the advisory proposal concerning merger-related compensation arrangements for Cameron’s named executive officers requires the affirmative vote of the holders of a majority of the shares of Cameron common stock represented at the special meeting and entitled to vote on such proposal. Shares represented at the meeting and entitled to vote on such proposal include all shares that are voted in person at the meeting or that are represented by valid proxies.

 

    The approval of the proposal to adjourn the special meeting, if necessary, to solicit additional proxies requires the affirmative vote of the holders of a majority of the shares of Cameron common stock represented at the special meeting and entitled to vote on such proposal. Shares represented at the meeting and entitled to vote on such proposal include all shares that are voted in person at the meeting or that are represented by valid proxies.

 

Q: How does the Cameron board of directors recommend that I vote at the special meeting?

 

A: The Cameron board of directors unanimously recommends a vote “FOR” each of the proposal to adopt the merger agreement, the advisory proposal concerning merger-related compensation arrangements for Cameron’s named executive officers and the proposal to adjourn the special meeting, if necessary, to solicit additional proxies.

 

Q: What will happen in the merger?

 

A: Schlumberger US, Rain Merger Sub LLC, Schlumberger and Cameron have agreed to a merger pursuant to which Rain Merger Sub LLC, a wholly-owned subsidiary of Schlumberger US that was formed for the purpose of the merger, will be merged with and into Cameron, with Cameron continuing as the surviving entity, and Schlumberger US acquiring all of the stock of Cameron.

In the merger, Schlumberger will issue shares of Schlumberger common stock to Schlumberger US, which will deliver those shares and cash as the consideration to be paid to holders of Cameron common stock. Following the merger, Cameron will cease to be a publicly held corporation and will be a wholly-owned subsidiary of Schlumberger US.

 

Q: What will I receive in the merger?

 

A: If the merger is completed, each share of Cameron common stock issued and outstanding immediately prior to the completion of the merger will be canceled and converted automatically into the right to receive 0.716 shares of Schlumberger common stock and $14.44 in cash, without interest. If the aggregate number of shares of Schlumberger common stock that you are entitled to receive as part of the merger consideration includes a fraction of a share of Schlumberger common stock, you will receive cash in lieu of that fractional share.

 

Q: How do I calculate the value of the merger consideration?

 

A: Because Schlumberger will pay a fixed amount of cash and issue a fixed number of shares of Schlumberger common stock as part of the merger consideration, the value of the merger consideration will depend in part on the price per share of Schlumberger common stock at the time the merger is completed. That price will not be known at the time of the special meeting and may be greater or less than the current price of Schlumberger common stock or the price of Schlumberger common stock at the time of the special meeting. The market price of Schlumberger common stock will fluctuate prior to the merger, and the market price of Schlumberger common stock when received by Cameron stockholders after the merger is completed could be greater or less than the current market price of Schlumberger common stock. See “Risk Factors” beginning on page 26 of this proxy statement/prospectus.

Based on the closing price of Schlumberger common stock on the NYSE on August 25, 2015, the last trading day before the public announcement of the merger agreement, the merger consideration represented approximately $66.36 per share of Cameron common stock. Based on the closing price of Schlumberger

 

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common stock on the NYSE on November 13, 2015, the most recent practicable trading day prior to the date of this proxy statement/prospectus, the merger consideration represented approximately $68.96 in value per share of Cameron common stock. We urge you to obtain current market quotations of Cameron common stock and Schlumberger common stock.

 

Q: What are the material U.S. federal income tax consequences of the merger?

 

A: The exchange of Cameron common stock for Schlumberger common stock and cash in the merger will be a taxable transaction for U.S. federal income tax purposes. Therefore, a U.S. Holder (as defined below) generally will recognize capital gain or loss equal to the difference, if any, between (1) the sum of the fair market value of Schlumberger common stock and cash received by such U.S. Holder in the merger, including any cash received in lieu of fractional shares of Cameron common stock, and (2) the U.S. Holder’s adjusted tax basis in its Cameron common stock.

Except in certain specific circumstances described in “The Merger—Material U.S. Federal Income Tax Consequences,” a Non-U.S. Holder (as defined below) generally will not be subject to U.S. federal income tax on any gain recognized on the exchange of Cameron common stock for Schlumberger common stock and cash in the merger.

Please refer to “The Merger—Material U.S. Federal Income Tax Consequences” beginning on page 69 of this proxy statement/prospectus for a description of the material U.S. federal income tax consequences of the merger. Determining the actual tax consequences of the merger to you may be complex and will depend on your specific situation. You should consult your tax advisor for a full understanding of the tax consequences of the merger to you.

 

Q: What happens if the merger is not completed?

 

A: If the proposal to adopt the merger agreement is not approved by Cameron stockholders or if the merger is not completed for any other reason, you will not receive any payment for your shares of Cameron common stock in connection with the merger. Instead, Cameron will remain as a public company and Cameron common stock will continue to be registered under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act, and listed and traded on the NYSE. If the merger agreement is terminated under specified circumstances, Cameron may be required to pay Schlumberger US a termination fee of $321 million as described under “The Merger Agreement—Termination, Amendment and Waiver—Fees and Expenses” beginning on page 91 of this proxy statement/prospectus.

 

Q: Will I receive future dividends?

 

A: Cameron does not pay regular quarterly cash dividends on shares of its common stock, and under the merger agreement Cameron will not be permitted to pay cash dividends. After completion of the merger, you will be entitled to dividends on any shares of Schlumberger common stock you receive in the merger. Although Schlumberger provides no assurances as to the level or payment of any future dividends on shares of its common stock, and Schlumberger’s board of directors has the power to modify its dividend policy at any time, Schlumberger currently pays dividends at a quarterly rate of $0.50 per share of Schlumberger common stock.

 

Q: How do Cameron’s directors and executive officers intend to vote?

 

A: Cameron’s directors and executive officers have informed us that they intend, as of the date hereof, to vote all of their shares of Cameron common stock in favor of each of the proposals to be considered at the special meeting, although none of them has entered into any agreement obligating them to do so. At the close of business on November 13, 2015, the most recent practical date prior to the date of this proxy statement/prospectus, directors and executive officers of Cameron beneficially owned and were expected to be entitled to vote approximately 2,883,636 shares of Cameron common stock, or approximately 1.5% of the shares of Cameron common stock outstanding on that date.

 

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Q: What happens if I sell my shares after the record date but before the special meeting?

 

A: The record date for the special meeting is earlier than the date of the special meeting and the date that the merger is expected to be completed. If you sell or otherwise transfer your shares of Cameron common stock after the record date but before the date of the special meeting, you will retain your right to vote at the special meeting. However, you will not have the right to receive the merger consideration to be received by Cameron stockholders in the merger. In order to receive the merger consideration, you must hold your shares through completion of the merger.

 

Q: Am I entitled to appraisal rights if I vote against the adoption of the merger agreement?

 

A: Yes. Cameron stockholders are entitled to appraisal rights under Section 262 of the General Corporation Law of the State of Delaware, which we refer to as the DGCL, provided they fully comply with and follow the procedures and satisfy the conditions set forth in Section 262 of the DGCL. For more information regarding appraisal rights, see “The Merger—Appraisal Rights” beginning on page 68 of this proxy statement/prospectus. In addition, a copy of Section 262 of the DGCL is attached as Annex B to this proxy statement/prospectus. Failure to comply with Section 262 of the DGCL will result in your waiver of, or inability to exercise, appraisal rights.

 

Q: Is completion of the merger subject to any conditions?

 

A: Yes. In addition to the approval of the proposal to adopt the merger agreement by Cameron stockholders, completion of the merger requires the receipt of the necessary governmental and regulatory approvals and the satisfaction or, to the extent permitted by applicable law, waiver of the other conditions specified in the merger agreement.

 

Q: Is consummation of the merger contingent upon approval by the holders of Schlumberger common stock?

 

A: No. A vote of holders of Schlumberger’s common stock is not required to consummate the merger.

 

Q: When do you expect to complete the merger?

 

A: Cameron and Schlumberger are working to complete the merger as promptly as practicable. Cameron and Schlumberger currently expect to complete the merger in the first quarter of 2016, subject to receipt of Cameron’s stockholder approval of the proposal to adopt the merger agreement, governmental and regulatory approvals and other usual and customary closing conditions. However, no assurance can be given as to when, or if, the merger will occur.

 

Q: Why am I being asked to consider and vote on a proposal, by non-binding, advisory vote, concerning compensation that may become payable to Cameron’s named executive officers in connection with the merger?

 

A: Under SEC rules, Cameron is required to seek a non-binding, advisory vote with respect to certain compensation that may become payable to Cameron’s named executive officers in connection with the merger.

 

Q: What will happen if Cameron stockholders do not approve the merger-related compensation arrangements for Cameron’s named executive officers?

 

A:

Approval of the compensation that may become payable to Cameron’s named executive officers that is based on, or otherwise relates to, the merger is not a condition to completion of the merger. Accordingly, you may vote not to approve the proposal concerning the merger-related compensation arrangements for Cameron’s named executive officers and vote to approve the proposal to adopt the merger agreement. The vote on the proposal concerning the merger-related compensation arrangements for Cameron’s named

 

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  executive officers is an advisory vote and will not be binding on Cameron or the surviving corporation in the merger. If the merger is completed, because Cameron is contractually obligated to pay such compensation, the compensation will be payable, subject only to the contractual conditions applicable to such compensation payments, regardless of the outcome of the advisory vote.

 

Q: Should I send in my stock certificates now?

 

A: No. Cameron stockholders should not send in their stock certificates at this time. At the effective time of the merger, your shares of Cameron common stock will be converted automatically into the right to receive the merger consideration. After completion of the merger, Schlumberger US’s exchange agent will send you a letter of transmittal and instructions for exchanging your shares of Cameron common stock for the merger consideration. Upon surrender of the certificates or book-entry shares for cancellation along with the executed letter of transmittal and other documents, a Cameron stockholder will receive the merger consideration and any unpaid dividends and distributions declared and paid in respect of Schlumberger common stock after completion of the merger. The shares of Schlumberger common stock you receive in the merger will be issued in book-entry form.

 

Q: What will happen to outstanding Cameron equity compensation awards in the merger?

 

A: For information regarding the treatment of Cameron’s equity awards, please see the section of this proxy statement/prospectus entitled “The Merger Agreement—Treatment of Equity Awards” beginning on page 77 of this proxy statement/prospectus.

 

Q: What if I participate in the Cameron and OneSubsea Retirement Savings Plans?

 

A: Shares of common stock held in our Retirement Savings Plans are held of record and are voted by the trustee of the Retirement Savings Plans at the direction of Retirement Savings Plan participants. Participants in the Retirement Savings Plans will be provided with a full paper set of proxy materials. Participants in the Retirement Savings Plans may direct the trustee of the plans as to how to vote shares allocated to their Retirement Savings Plan accounts. If you do not provide voting instructions, the trustee will vote shares allocated to your plan account in the same proportion as those votes cast by plan participants submitting voting instructions considered as a group.

The cutoff date for voting for participants in the Retirement Savings Plans is December 15, 2015.

 

Q: When and where will the special meeting be held?

 

A: The special meeting will be held on Thursday, December 17, 2015, at Cameron’s corporate headquarters, 1333 West Loop South, Suite 1700, Houston, Texas 77027, commencing at 10:00 a.m. local time.

 

Q: Who may vote?

 

A: You are entitled to vote your shares of Cameron common stock if you are a stockholder of record as of the close of business on November 16, 2015, the record date for the special meeting.

 

Q: How many votes do I have?

 

A: You are entitled to one vote for each share of Cameron common stock that you owned as of the close of business on the record date. The enclosed proxy card shows the number of shares that you are entitled to vote. As of the close of business on the record date, there were approximately 191,115,313 outstanding shares of Cameron common stock.

 

Q: What is the difference between holding shares as a stockholder of record and as a beneficial owner?

 

A:

If your shares of Cameron common stock are registered directly in your name with the transfer agent of Cameron, Computershare Trust Company, N.A., you are considered the stockholder of record with respect

 

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  to those shares. As the stockholder of record, you have the right to vote, or to grant a proxy for your vote directly to Cameron or to a third party to vote, at the special meeting.

If your shares are held by a bank, broker, trust company or other nominee, you are considered the beneficial owner of shares held in “street name,” and your bank, broker, trust company or other nominee is considered the stockholder of record with respect to those shares. Your bank, broker, trust company or other nominee will send you, as the beneficial owner, a package describing the procedure for voting your shares. You should follow the instructions provided by them to vote your shares. You are invited to attend the special meeting; however, you may not vote these shares in person at the special meeting unless you obtain a “legal proxy” from your bank, broker, trust company or other nominee that holds your shares, giving you the right to vote the shares at the special meeting.

 

Q: How do I vote?

 

A: Registered stockholders may vote in person by attending the special meeting, or by telephone, Internet or mail. If you are voting by mail, please sign, date and return the enclosed proxy card. If you are voting by telephone or Internet, please follow the instructions on the enclosed proxy card. Whether or not you plan to attend the special meeting, we encourage you to vote by proxy as soon as possible. If your shares are held in the name of a bank, broker, trust company or other nominee, follow the instructions you receive from your nominee on how to vote your shares. If you hold your shares in more than one type of account or your shares are registered differently, you may receive more than one proxy card. We encourage you to vote each proxy card that you receive.

If you choose to attend the special meeting in person, a government-issued picture identification will be required to enter the special meeting. If you are the representative of a corporate or institutional stockholder, you must present valid photo identification along with proof that you are the representative of such stockholder. If your shares are held by a bank, broker, trust company or other nominee, you will be required to present evidence of your ownership of shares, which you can obtain from your broker, bank, trust company or other nominee.

 

Q: How will my shares be voted?

 

A: If you vote by proxy, the individuals named on the proxy card (your proxies) will vote your shares in the manner you indicate. You may also specify whether you approve, disapprove or abstain from the other proposals.

If you sign and return your proxy card without indicating your voting instructions, your shares will be voted “FOR” each of the proposal to adopt the merger agreement, the advisory proposal concerning merger-related compensation arrangements for Cameron’s named executive officers and the proposal to adjourn the special meeting, if necessary, to solicit additional proxies.

 

Q: What if my shares are held by a broker?

 

A: If your shares of Cameron common stock are held by a bank, broker, trust company or other nominee (that is, in “street name”), you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your bank, broker, trust company or other nominee. Please note that you may not vote shares held in “street name” by returning a proxy card directly to Cameron or by voting in person at the special meeting unless you provide a “legal proxy,” which you must obtain from your bank, broker, trust company or other nominee.

If you do not instruct your bank, broker, trust company or other nominee on how to vote your shares, your nominee may not vote your shares on (1) the proposal to adopt the merger agreement (which will have the same effect as a vote “AGAINST” adoption of the merger agreement), (2) the advisory proposal concerning merger-related compensation arrangements for Cameron’s named executive officers (which will have no effect on the outcome of such proposal, assuming a quorum is present) or (3) the proposal to adjourn the

 

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special meeting, if necessary, to solicit additional proxies (which will have no effect on the outcome of such proposal). We refer to instances where a nominee holds shares for a beneficial owner but cannot vote on a proposal because the nominee does not have the discretionary power to do so and has not received instructions from the beneficial owner as “broker non-votes.”

 

Q: May I revoke or change my vote?

 

A: Yes. You may revoke or change your proxy at any time prior to a vote at the special meeting by:

 

    notifying Cameron’s Corporate Secretary in writing;

 

    signing and returning a proxy card with a later date;

 

    subsequently voting by Internet or telephone; or

 

    attending the special meeting and revoking the proxy.

Written notices of revocation and other communications with respect to the revocation of proxies should be addressed as follows: Cameron International Corporation, Attention: Corporate Secretary, 1333 West Loop South, Suite 1700, Houston, Texas 77027.

Attendance at the Cameron special meeting will not by itself revoke a previously granted proxy. If you hold your shares in “street name” and you wish to change your vote at the Cameron special meeting, you will need to obtain a “legal proxy” from the broker or nominee that holds your shares.

 

Q: What constitutes a quorum?

 

A: A majority of the shares of Cameron common stock issued and outstanding as of the close of business on the record date and entitled to vote, present in person or represented by proxy, at the special meeting will constitute a quorum for the special meeting. If you have returned valid proxy instructions or attend the meeting in person and are entitled to vote your shares at the meeting, your Cameron common stock will be counted for the purpose of determining whether there is a quorum, even if you wish to abstain from voting on some or all matters introduced at the meeting. “Broker non-votes” are not counted for quorum purposes unless the nominee has been instructed to vote on at least one of the proposals presented in this proxy statement/prospectus.

 

Q: What will happen if I return my proxy card without indicating how to vote?

 

A: If you are a holder of record and you sign and return your proxy card without indicating how to vote on any particular proposal, the Cameron common stock represented by your proxy will be voted “FOR” each of the proposal to adopt the merger agreement, the advisory proposal concerning merger-related compensation arrangements for Cameron’s named executive officers and the proposal to adjourn the special meeting, if necessary, to solicit additional proxies.

 

Q: What will happen if I fail to vote or I abstain from voting?

 

A: If you fail to vote, fail to instruct your bank, broker, trust company or other nominee to vote, or vote to abstain, it will have the same effect as a vote cast “AGAINST” the proposal to adopt the merger agreement.

If you fail to vote, fail to instruct your bank, broker, trust company or other nominee to vote, it will have no effect on the advisory proposal concerning merger-related compensation arrangements for Cameron’s named executive officers, assuming that a quorum is present, or the proposal to adjourn the special meeting, if necessary, to solicit additional proxies. A vote to abstain will have the same effect as a vote cast “AGAINST” the advisory proposal concerning merger-related compensation arrangements for Cameron’s named executive officers and the proposal to adjourn the special meeting, if necessary, to solicit additional proxies.

 

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Q: What other matters will be acted upon at the meeting?

 

A: We do not know of any other matters that will be presented at the special meeting, other than those mentioned in this proxy statement/prospectus.

 

Q: Who pays the cost of this proxy solicitation?

 

A: Cameron will pay the cost of solicitation of proxies, including preparing, printing and mailing this proxy statement/prospectus. Cameron has retained D.F. King & Co., Inc. to help in soliciting proxies for a fee not to exceed $12,500, plus reimbursement for out-of-pocket expenses. Cameron will also reimburse brokers, banks or other custodians, nominees and fiduciaries for their charges and expenses in forwarding proxy materials to beneficial owners.

 

Q: Who may attend the special meeting?

 

A: Holders of record of Cameron common stock as of the close of business on November 16, 2015 may attend the special meeting. For a period of at least 10 days prior to the special meeting, a complete list of stockholders entitled to vote at the special meeting will be open to examination by any Cameron stockholder during ordinary business hours at the Office of the Corporate Secretary at Cameron’s corporate offices at 1333 West Loop South, Suite 1700, Houston, Texas 77027.

 

Q: What do I do if I receive more than one set of voting materials?

 

A: You may receive more than one set of voting materials for the special meeting, including multiple copies of this proxy statement/prospectus, proxy cards and/or voting instruction forms. This can occur if you hold your shares in more than one brokerage account, if you hold shares directly as a record holder and also in “street name,” or otherwise through a nominee, and in certain other circumstances. If you receive more than one set of voting materials, each should be voted and/or returned separately in order to ensure that all of your shares are voted.

 

Q: Who is the inspector of election?

 

A: The Cameron board of directors has appointed a representative of Computershare Trust Company, N.A. to act as the inspector of election at the special meeting.

 

Q: Where can I find the voting results of the special meeting?

 

A: The preliminary voting results will be announced at the special meeting. In addition, within four business days following certification of the final voting results, Cameron intends to file the final voting results with the SEC on Form 8-K.

 

Q: Are there any risks in the merger that I should consider?

 

A: Yes. There are risks associated with all business combinations, including the merger. These risks are discussed in more detail in the section titled “Risk Factors” beginning on page 26 of this proxy statement/prospectus.

 

Q: What do I need to do now?

 

A: Carefully read and consider the information contained in and incorporated by reference into this proxy statement/prospectus, including its annexes. Then, please vote your shares of Cameron common stock, which you may do by:

 

    completing, dating, signing and returning the enclosed proxy card in the accompanying postage-paid envelope;

 

    submitting your proxy by telephone or via the Internet by following the instructions included on your proxy card; or

 

    attending the special meeting and voting by ballot in person.

 

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If your shares are held in the name of a bank, broker, trust company or other nominee, please instruct your nominee to vote your shares by following the instructions you receive from your nominee.

 

Q: Where can I find more information about the parties to the merger?

 

A: You can find more information about Cameron and Schlumberger from the various sources described in the sections titled “The Companies” and “Where You Can Find More Information” beginning on pages 36 and 128 of this proxy statement/prospectus, respectively.

 

Q: Whom should I call with questions?

 

A: Cameron stockholders who have questions about the merger or the other matters to be voted on at the special meeting or desire additional copies of this document or additional proxy cards should contact:

D.F. KING & CO., INC.

48 Wall Street, 22nd Floor

New York, NY 10005

Banks and Brokers Call Collect: (212) 493-3910

All Others Please Call Toll-Free: (866) 751-6312

 

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SUMMARY

This summary highlights selected information contained in this proxy statement/prospectus with respect to the merger and the merger agreement and may not contain all of the information that is important to you. To understand the merger and the merger agreement fully and for a more complete description of the legal terms of the merger agreement, you should carefully read this entire proxy statement/prospectus and the documents to which Schlumberger and Cameron refer you. A copy of the merger agreement is attached as Annex A to this proxy statement/prospectus and is incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 128 of this proxy statement/prospectus. Schlumberger and Cameron have included in this summary references to other portions of this proxy statement/prospectus to direct you to a more complete description of the topics presented, which you should review carefully in their entirety.

The Companies (page 36)

Cameron International Corporation

Founded in 1920, Cameron is a leading provider of flow equipment products, systems and services to worldwide oil and gas industries.

Cameron’s common stock is listed on the NYSE, where it is traded under the symbol “CAM.”

Cameron was incorporated in the state of Delaware in November 1994. Cameron’s executive offices are headquartered at 1333 West Loop South, Suite 1700, Houston, Texas 77027, and its telephone number is (713) 513-3300.

Schlumberger Limited

Founded in 1926, Schlumberger Limited (Schlumberger N.V.), which we refer to as Schlumberger, is the world’s leading supplier of technology, integrated project management and information solutions to the international oil and gas exploration and production industry.

The principal United States market for Schlumberger’s common stock is the NYSE, where it is traded under the symbol “SLB.” Schlumberger’s common stock is also traded on the Euronext Paris, London and SIX Swiss stock exchanges.

Schlumberger has principal executive offices in Paris, Houston, London and The Hague. Its principal executive offices in the United States are located at 5599 San Felipe, 17th Floor, Houston, Texas 77056, and its telephone number is (713) 513-2000.

Schlumberger Holdings Corporation

Formed in 2010, Schlumberger Holdings Corporation, which we refer to as Schlumberger US, is a Delaware corporation and an indirect wholly-owned subsidiary of Schlumberger. Schlumberger US is the parent company of Schlumberger’s U.S. subsidiaries that conduct Schlumberger’s U.S. operations.

Schlumberger US’s executive offices are located at 300 Schlumberger Drive, Sugar Land, Texas 77478, and its telephone number is (713) 513-2000.

Rain Merger Sub LLC

Rain Merger Sub LLC, which we refer to as Merger Sub, is a Delaware limited liability company and a direct wholly-owned subsidiary of Schlumberger US. Merger Sub was formed solely for the purpose of participating in the merger and has conducted no activities other than in connection with the merger.

 



 

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The Merger

The Merger Agreement (page 76)

Schlumberger US, Merger Sub, Schlumberger and Cameron have entered into an Agreement and Plan of Merger dated as of August 25, 2015, which, as it may be amended from time to time, we refer to as the merger agreement. Subject to the terms and conditions of the merger agreement and in accordance with Delaware law, Merger Sub will be merged with and into Cameron, with Cameron continuing as the surviving corporation. Upon completion of this transaction, which we refer to as the merger, Cameron will be a wholly-owned subsidiary of Schlumberger US, and Cameron common stock will no longer be publicly traded. A copy of the merger agreement is attached as Annex A to this proxy statement/prospectus. You should read the entire merger agreement carefully before making any decisions regarding the merger, including approval of the proposal to adopt the merger agreement, because it is the legal document that governs the merger.

The Merger Consideration (page 77)

If the merger is completed, each share of Cameron common stock issued and outstanding immediately prior to the effective time will be converted into the right to receive 0.716 shares of Schlumberger common stock and $14.44 in cash, without interest. The number of shares of Schlumberger common stock delivered in respect of each share of Cameron common stock in the merger is referred to as the exchange ratio, and the amount of cash delivered in respect of each share of Cameron common stock in the merger is referred to as the per share cash amount. Schlumberger US will not deliver any fractional shares of Schlumberger common stock in the merger. Instead, the total number of shares of Schlumberger common stock that each Cameron stockholder will receive in the merger will be rounded down to the nearest whole number, and each Cameron stockholder will receive cash, without interest, for any fractional shares of Schlumberger common stock that he or she would otherwise receive in the merger. The amount of cash for fractional shares will be calculated by multiplying the fraction of a share of Schlumberger common stock that the Cameron stockholder would otherwise be entitled to receive in the merger by the closing sale price of a share of Schlumberger common stock on the business day immediately preceding the completion of the merger. The Schlumberger common stock issuable based on the exchange ratio, the cash payable based on the per share cash amount and any cash payable in lieu of fractional shares are collectively referred to as the merger consideration.

Example: If you currently own 100 shares of Cameron common stock, you will be entitled to receive 71 shares of Schlumberger common stock based on the exchange ratio, $1,440 in cash based on the per share cash amount and cash for the market value of 0.6 shares of Schlumberger common stock at the closing sale price of a share of Schlumberger common stock on the business day immediately preceding the completion of the merger.

The exchange ratio and the per share cash amount are fixed, which means that they will not change between now and the date of the merger, regardless of whether the market price of either Schlumberger or Cameron common stock changes. Therefore, the value of the merger consideration will depend in part on the market price of Schlumberger common stock at the time Cameron stockholders receive Schlumberger common stock in the merger. The market price of Schlumberger common stock will fluctuate prior to the merger, and the market price of Schlumberger common stock when received by Cameron stockholders in connection with the merger could be greater or less than the current market price of Schlumberger common stock.

 



 

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Special Meeting of Cameron Stockholders (page 37)

Meeting

The Cameron special meeting will be held on Thursday, December 17, 2015, at Cameron’s corporate headquarters, 1333 West Loop South, Suite 1700, Houston, Texas 77027, commencing at 10:00 a.m. local time. At the Cameron special meeting, Cameron stockholders will be asked to vote on the following proposals:

 

    to adopt the merger agreement;

 

    to approve by non-binding, advisory vote, the compensation that may become payable to Cameron’s named executive officers in connection with the merger; and

 

    to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the proposal to adopt the merger agreement at the time of the special meeting.

Record Date

Only Cameron stockholders of record at the close of business on November 16, 2015, which we refer to as the record date, will be entitled to notice of, and to vote at, the special meeting or any adjournments or postponements thereof.

At the close of business on the record date, there were approximately 191,115,313 shares of Cameron common stock issued and outstanding and entitled to vote at the special meeting. Cameron stockholders are entitled to one vote for each share of Cameron common stock they owned as of the close of business on the record date.

For a period of at least 10 days prior to the special meeting, a complete list of stockholders entitled to vote at the special meeting will be open to examination by any Cameron stockholder during ordinary business hours at the Office of the Corporate Secretary at Cameron’s corporate offices at 1333 West Loop South, Suite 1700, Houston, Texas 77027.

Required Vote

To adopt the merger agreement, holders of a majority of the shares of Cameron common stock outstanding on the record date must vote in favor of adoption of the merger agreement. Cameron cannot complete the merger unless its stockholders adopt the merger agreement. Because approval is based on the affirmative vote of a majority of the outstanding shares of Cameron common stock, a Cameron stockholder’s failure to vote, an abstention from voting or the failure of a Cameron stockholder who holds his or her shares in “street name” through a broker or other nominee to give voting instructions to such broker or other nominee will all have the same effect as a vote “AGAINST” adoption of the merger agreement.

The approval of the advisory compensation proposal and the approval of the proposal to adjourn the special meeting, if necessary, to solicit additional proxies each requires the affirmative vote of the holders of a majority of the shares of Cameron common stock represented at the special meeting and entitled to vote on such proposal. A Cameron stockholder’s failure to vote or the failure of an Cameron stockholder who holds his or her shares in “street name” through a broker or other nominee to give voting instructions to such broker or other nominee will have no effect on the proposal to adjourn the special meeting, if necessary, to solicit additional proxies and, assuming a quorum is present, the advisory compensation proposal. A Cameron stockholder’s abstention from voting will have the effect of a vote “AGAINST” the advisory compensation proposal and the proposal to adjourn the special meeting, if necessary, to solicit additional proxies. The advisory compensation proposal is an advisory vote only and will not be binding on Cameron or the Cameron board of directors.

 



 

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Recommendation of the Cameron Board of Directors

After careful consideration, the Cameron board of directors, at a meeting held on August 25, 2015, unanimously approved and declared advisable the merger agreement, the merger and all of the other transactions contemplated by the merger agreement, declared that it is in the best interests of Cameron and its stockholders to enter into the merger agreement and consummate the merger and all of the other transactions contemplated by the merger agreement, directed that adoption of the merger agreement be submitted to a vote at a meeting of the Cameron stockholders, and recommended that the Cameron stockholders vote to adopt the merger agreement. Accordingly, the Cameron board of directors unanimously recommends that Cameron stockholders vote “FOR” the proposal to adopt the merger agreement and vote “FOR” all other proposals.

In evaluating the merger, the Cameron board of directors consulted with and received the advice of Cameron’s outside legal and financial advisors, held discussions with Cameron’s management and considered a number of factors that it believed supported its decision to enter into the merger agreement. These factors included, but were not limited to, those listed in “The Merger—Cameron’s Reasons for the Merger; Recommendation of the Cameron Board of Directors.”

Schlumberger Stockholder Approval Is Not Required

Schlumberger stockholders are not required to adopt the merger agreement or approve the merger or the issuance of shares of Schlumberger common stock in connection with the merger.

Share Ownership of Cameron’s Directors and Executive Officers (page 38)

At the close of business on November 13, 2015, the most recent practicable date prior to the date of this proxy statement/prospectus, directors and executive officers of Cameron beneficially owned and were expected to be entitled to vote 2,883,636 shares of Cameron common stock, or approximately 1.5% of the shares of Cameron common stock outstanding on that date. Cameron’s directors and executive officers have informed Cameron that they intend, as of the date hereof, to vote their shares in favor of the adoption of the merger agreement and each of the other Cameron proposals described in this proxy statement/prospectus, although none of them have entered into any agreements obligating them to do so.

Treatment of Equity Awards (page 77)

At the effective time of the merger, all outstanding options to purchase shares of Cameron common stock, including any options granted following the execution of the merger agreement, will be converted into options to purchase shares of Schlumberger common stock with the duration and terms of such converted options to remain generally the same as the original Cameron option. The number of shares of Schlumberger common stock subject to each option will be determined by multiplying the number of shares of Cameron common stock subject to the original Cameron option by the equity award exchange ratio, rounded down to the nearest whole share. See “The Merger Agreement—Treatment of Equity Awards—Stock Options” beginning on page 77 of this proxy statement/prospectus. The option exercise price per share of Schlumberger common stock will be equal to the option exercise price per share of Cameron common stock under the original Cameron option divided by the equity award exchange ratio, rounded up to the nearest whole cent. The term “equity award exchange ratio” means (1) the exchange ratio (0.716) plus (2) the quotient obtained by dividing $14.44 by the average of the volume weighted average price of a share of Schlumberger common stock on each of the five consecutive trading days ending with the second complete trading day prior to the effective time of the merger.

At the effective time of the merger, each outstanding award of restricted stock units granted by Cameron under any of its plans, including any restricted stock units granted following the execution of the merger agreement, will be converted into an award of restricted stock units that will be settled in Schlumberger common

 



 

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stock with substantially the same terms as the original Cameron award. The number of shares of Schlumberger common stock subject to the converted restricted stock unit award will be determined by multiplying the number of shares of Cameron common stock subject to the Cameron restricted stock unit award by the equity award exchange ratio, rounded to the nearest whole number of shares.

At the effective time of the merger, each outstanding award of performance shares granted by Cameron under any of its plans will be converted into fully vested deferred stock units that will be settled in Schlumberger common stock on the same payment schedule as the original Cameron award. For purposes of determining the number of performance shares earned under the Cameron performance share award, unless otherwise specified in an individual change in control agreement with an employee, (1) performance with respect to the total shareholder return metric will be determined based on total shareholder return as of the effective time and (2) performance with respect to the return on invested capital (ROIC) metric will be determined as follows: (A) for any completed performance year prior to the effective time, based on actual ROIC performance as certified by the Cameron compensation committee, (B) if the effective time occurs in 2015, based on actual ROIC through the effective time (or the most recent practicable date prior to the effective time) and a reasonable good faith estimate of ROIC performance for the remainder of 2015 and (C) target performance for any other performance year.

At the effective time of the merger, each outstanding award of deferred stock units granted by Cameron under any of its plans will be canceled and converted into the right to receive the merger consideration based on the total number of shares of Cameron common stock subject to the outstanding award.

Opinion of Cameron’s Financial Advisor (page 54)

On August 25, 2015, Credit Suisse Securities (USA) LLC, which we refer to as Credit Suisse, rendered its oral opinion to the Cameron board of directors (which was subsequently confirmed in writing by delivery of Credit Suisse’s written opinion dated the same date) to the effect that, as of August 25, 2015, the merger consideration to be received by the holders of Cameron common stock in the merger pursuant to the merger agreement was fair, from a financial point of view, to such holders.

Credit Suisse’s opinion was directed to the Cameron board of directors, and only addressed, as of August 25, 2015, the fairness, from a financial point of view, to the holders of Cameron common stock of the merger consideration to be received by such holders in the merger pursuant to the merger agreement and did not address any other aspect or implication of the merger. The summary of Credit Suisse’s opinion in this proxy statement/prospectus is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex C to this proxy statement/prospectus and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Credit Suisse in preparing its opinion. However, neither Credit Suisse’s written opinion nor the summary of its opinion and the related analyses set forth in this proxy statement/prospectus is intended to be, and they do not constitute, advice or a recommendation to any stockholder as to how such holder should vote or act on any matter relating to the proposed merger.

Ownership of Schlumberger After the Merger

Based on the number of shares of Cameron common stock, restricted stock units and deferred stock units outstanding as of November 13, 2015, Schlumberger expects to issue approximately 136,838,564 shares of its common stock to Schlumberger US, which will deliver such shares to Cameron stockholders pursuant to the merger and reserve for issuance approximately 4,331,028 additional shares of Schlumberger common stock in connection with the exercise or conversion of Cameron’s outstanding equity awards. The actual number of shares of Schlumberger common stock to be issued and reserved for issuance in connection with the merger will be

 



 

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determined at the completion of the merger based on the exchange ratio of 0.716, the equity award exchange ratio and the number of shares of Cameron common stock, options, restricted stock units and deferred stock units outstanding at such time. Immediately after completion of the merger, it is expected that former Cameron stockholders will own approximately 10% of Schlumberger’s outstanding common stock, based on the number of shares of Cameron common stock and Schlumberger common stock outstanding, on a fully diluted basis.

Interests of Cameron’s Directors and Executive Officers in the Merger (page 63)

In considering the recommendation of the Cameron board of directors with respect to the proposal to adopt the merger agreement, Cameron stockholders should be aware that Cameron’s directors and executive officers have interests in the merger that are different from, or in addition to, those of Cameron’s stockholders generally. The independent members of Cameron’s board of directors were aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger and in recommending that Cameron stockholders vote in favor of the proposal to adopt the merger agreement and the advisory compensation proposal. These interests include, among others:

 

    under the merger agreement, Cameron equity awards (including those held by the executive officers) other than performance share awards and deferred stock units will convert into Schlumberger equity awards of the corresponding type (generally subject to existing terms and conditions, including accelerated vesting of unvested awards on a qualifying termination following the effective time);

 

    each Cameron performance share award (including those held by the executive officers) will convert into fully vested Schlumberger deferred stock units payable on the schedule applicable to the Cameron performance share awards;

 

    each Cameron deferred stock unit held by non-employee directors will fully vest and be settled for the merger consideration;

 

    equity awards made by Cameron to Mr. Rowe from and after September 2015 will be fully vested on any termination following the consummation of the transaction;

 

    Cameron’s executive officers, including each of its named executive officers, are party to change of control agreements with Cameron that provide severance and other benefits in the case of qualifying terminations of employment in connection with or following a change of control, including completion of the merger; and for purposes of these agreements, certain employees of Cameron (including certain executive officers) who are expected to provide transitional services to Cameron following the effective time will be deemed to have experienced a qualifying termination as of the effective time and, therefore, will become fully vested in their existing cash severance benefits and equity awards granted prior to August 25, 2015 as of the effective time;

 

    employees of Cameron (including the executive officers) are eligible to receive retention bonuses and other awards or payments on the terms and conditions agreed between Cameron and Schlumberger in an aggregate amount not to exceed $50 million (retention payments of approximately $1.95 million have been allocated to certain executive officers (none of whom is a named executive officer) as of the date of this proxy statement/prospectus); and

 

    Cameron’s directors and executive officers are entitled to continued indemnification and insurance coverage under the merger agreement.

Please see “The Merger—Interests of Cameron’s Directors and Executive Officers in the Merger” beginning on page 63 of this proxy statement/prospectus and “Advisory Vote on Merger-Related Compensation for Cameron’s Named Executive Officers” beginning on page 66 of this proxy statement/prospectus for additional information about these financial interests.

 



 

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Listing of Schlumberger Stock and Delisting and Deregistration of Cameron Stock (page 68)

Schlumberger will apply to have the shares of its common stock to be issued and delivered in the merger approved for listing on the NYSE, where Schlumberger common stock is currently traded. If the merger is completed, shares of Cameron common stock will no longer be listed on the NYSE, and will be deregistered under the Exchange Act.

Appraisal Rights (page 68)

In connection with the merger, record holders of Cameron common stock who do not vote in favor of the proposal to adopt the merger agreement are entitled to appraisal rights under Section 262 of the General Corporation Law of the State of Delaware, which we refer to as the DGCL, provided they fully comply with and follow the procedures and satisfy all of the conditions set forth in Section 262 of the DGCL. For more information regarding appraisal rights, see “The Merger—Appraisal Rights.” In addition, a copy of Section 262 of the DGCL is attached as Annex B to this proxy statement/prospectus. Failure to comply with Section 262 of the DGCL will result in your waiver of, or inability to exercise, appraisal rights.

Completion of the Merger Is Subject to Certain Conditions (page 89)

Conditions to the Obligations of Each Party to Effect the Merger. The respective obligations of each party to effect the merger will be subject to the fulfillment of the following conditions on or prior to the closing date:

 

    the approval of the proposal to adopt the merger agreement by Cameron’s stockholders;

 

    the termination or expiration of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which we refer to as the HSR Act, and the issuance by the European Commission of a decision under Council Regulation No. 4064/89 of the European Community, which we refer to as the EC Merger Regulation, declaring the merger compatible with the common market;

 

    the expiration, lapse or termination of all applicable waiting or other time periods under antitrust laws in other specified jurisdictions;

 

    the absence of any judgment, injunction, order or decree of any governmental authority in the United States, the European Union or other specified jurisdictions prohibiting or enjoining the consummation of the merger;

 

    the effectiveness of the registration statement that includes this prospectus, and the absence of any stop order or proceeding seeking a stop order;

 

    the approval for listing on the NYSE of the Schlumberger common stock to be issued pursuant to the merger;

 

    performance in all material respects by each of Schlumberger US, Merger Sub and Schlumberger, on the one hand, and Cameron, on the other hand, of its respective covenants and agreements required to be performed by it under the merger agreement at or prior to the closing date; and

 

    representations and warranties of Schlumberger US, Merger Sub and Schlumberger, on the one hand, and Cameron, on the other hand, contained in the merger agreement being true and correct as of the date of the merger agreement and as of the closing date, subject to certain materiality thresholds.

Regulatory Approvals Required for the Merger (page 73)

The merger is subject to review by the Antitrust Division of the U.S. Department of Justice, which we refer to as the Antitrust Division, under the HSR Act. Under the HSR Act, Schlumberger and Cameron are required to make premerger notification filings and to await the expiration or early termination of the statutory waiting

 



 

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period (and any extension of the waiting period) prior to completing the merger. On September 16, 2015, Schlumberger and Cameron each filed a Premerger Notification and Report Form with the Antitrust Division and the Federal Trade Commission, which we refer to as the FTC. On October 16, 2015, Schlumberger withdrew its filing and refiled on October 19, 2015 in order to provide the Antitrust Division and the FTC with an additional 30-day period to review the companies’ filings.

The merger is also subject to antitrust review by government authorities in several foreign jurisdictions in which the companies have a sufficient presence to require filings. As of the date of this proxy statement/prospectus, the parties have made, or are about to make, antitrust filings in the European Union and in certain other jurisdictions.

Under the terms of the merger agreement, Schlumberger has the right, but not the obligation, to oppose or refuse to consent, through litigation or otherwise, to any request, attempt or demand by any governmental entity or other person for any divestiture, hold separate condition or any other restriction with respect to any assets, businesses or product lines of Schlumberger, Cameron or any of their respective subsidiaries and has the obligation to defend any litigation instituted by a governmental entity or other person with respect to the legality of the merger under applicable regulatory laws. Schlumberger US, Merger Sub and Schlumberger are required to take all such action necessary to resolve any objections that an antitrust regulator may assert under regulatory laws, and to avoid or eliminate, and minimize the impact of, each impediment under regulatory laws that may be asserted by a governmental entity in order to enable the closing to occur as soon as reasonably possible (and in any event no later than the termination date); however:

 

    none of Schlumberger US, Merger Sub, Schlumberger or Cameron or their respective subsidiaries is required to take, or cause to be taken, or agree to take, any action with respect to any of the assets, businesses or product lines of Cameron, Schlumberger, any of their subsidiaries, or any combination thereof, if such action (whether taken with respect to assets of Cameron and its subsidiaries or Schlumberger and its subsidiaries), individually or in the aggregate, would result in the divestiture, sale, hold separate, license or limitation on the conduct of business that, individually or taken together, would reasonably be expected to be material to Cameron and its subsidiaries, taken as a whole, and

 

    Schlumberger is not required to take or agree to take any action that would result in the divestiture, sale, hold separate, license or limitation of the conduct, in whole or in significant part, of the OneSubsea joint venture. If the merger has not occurred on or before the termination date due to the failure to obtain regulatory clearances, or if an order, decree or ruling permanently prohibits the merger, the merger agreement may be terminated.

No Solicitation by Cameron (page 84)

Under the merger agreement, Cameron has agreed not to (and to direct and use its reasonable best efforts to cause its officers, directors, employees, investment bankers, consultants, attorneys, accountants, advisors, agents and other representatives not to), among other things:

 

    solicit, initiate, knowingly encourage or knowingly facilitate any acquisition proposal;

 

    provide nonpublic information regarding Cameron or access to Cameron’s properties, books or records to a third party in connection with an acquisition proposal; or

 

    approve or recommend an acquisition proposal.

 



 

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However, before the adoption of the merger agreement by the Cameron stockholders, Cameron may, under certain circumstances, engage in negotiations with and provide information regarding Cameron to a third party making an unsolicited, written acquisition proposal that Cameron’s board of directors concludes in good faith is reasonably likely to be superior to the merger. Under the merger agreement, Cameron is required to notify Schlumberger if it receives any acquisition proposal or request for information in connection with such a proposal. Additionally, before the adoption of the merger agreement by the Cameron stockholders, the Cameron board of directors may withdraw its recommendation of the merger if it determines in good faith, after consultation with its outside legal counsel and financial advisors, that a failure to change its recommendation would be inconsistent with its fiduciary duties to Cameron stockholders.

Termination of the Merger Agreement (page 90)

The merger agreement may be terminated at any time prior to the effective time of the merger, notwithstanding the adoption of the merger agreement by Cameron’s stockholders (except as described below):

 

    by mutual written agreement of Schlumberger US, Schlumberger and Cameron;

 

    by either Schlumberger or Cameron if:

 

    the merger has not occurred on or before the “termination date,” August 25, 2016, which termination date may, subject to specified conditions, at the option of either Schlumberger or Cameron, be extended to a date not later than November 25, 2016;

 

    the Cameron stockholders do not approve the proposal to adopt the merger agreement at the special meeting or any adjournment or postponement of the special meeting; or

 

    a court of competent jurisdiction in the United States, the European Union or other specified jurisdictions has issued a final, nonappealable order, decree or ruling permanently restraining, enjoining or otherwise prohibiting the merger;

 

    by Cameron if:

 

    Schlumberger US or Schlumberger is in breach of the merger agreement such that the conditions to the merger set forth in the merger agreement would not be satisfied and such breach is not curable prior to the termination date; or

 

    Cameron has received an acquisition proposal that Cameron’s board of directors determines in good faith to be superior to the merger and, after giving Schlumberger at least three business days’ notice of its intent to terminate the agreement (and at least two business days’ notice following any change to the financial terms of such proposal), resolves to accept such proposal and pay the termination fee described below (Cameron may not terminate the merger agreement pursuant to this provision following the approval of the proposal to adopt the merger agreement by Cameron’s stockholders); or

 

    by Schlumberger if:

 

    Cameron is in breach of the merger agreement such that the conditions to the merger set forth in the merger agreement would not be satisfied and such breach is not curable prior to the termination date; or

 

    the Cameron board of directors fails to recommend the merger to Cameron stockholders or there is a change in the Cameron board of directors’ recommendation.

 



 

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Termination Fee and Expenses (page 91)

The merger agreement provides for the payment of a termination fee by Cameron to Schlumberger US if the agreement is terminated in specified circumstances. Cameron will be obligated to pay Schlumberger US a $321 million termination fee if:

 

    either party terminates the merger agreement because Cameron’s stockholder approval of the proposal to adopt the merger agreement is not obtained and:

 

    prior to such time there is a publicly announced or disclosed acquisition proposal by another bidder that has not been withdrawn, and

 

    within one year after the date of termination, Cameron enters into a definitive agreement with respect to, or consummates, an acquisition proposal;

 

    Cameron terminates the merger agreement in order to enter into an agreement providing for a superior proposal; or

 

    the Cameron board of directors fails to recommend its approval of the merger or there is a change in the Cameron board of directors’ recommendation.

The merger agreement generally provides that all expenses incurred by the parties will be borne by the party that has incurred such expenses. However, under specified circumstances, either party may be required to reimburse the other party for its expenses of up to $10 million.

Payment of Dividends and Stock Repurchases (page 81)

Schlumberger

Schlumberger paid quarterly cash dividends of $0.50 per share since the first quarter of 2015, $0.40 per share in 2014, $0.3125 per share in 2013 and $0.2750 per share in 2012. Schlumberger is not prohibited under the terms of the merger agreement from paying quarterly dividends consistent with past practice.

On July 18, 2013, the Schlumberger board of directors approved a $10 billion share repurchase program to be completed at the latest by June 30, 2018. Schlumberger had repurchased $8.2 billion of shares under this new share repurchase program as of September 30, 2015. Schlumberger is not prohibited from making repurchases under the share repurchase program by the terms of the merger agreement.

Cameron

Cameron does not pay regular quarterly cash dividends. Under the terms of the merger agreement, during the period before the closing of the merger, Cameron is prohibited from paying quarterly dividends.

Cameron has an authorized stock repurchase program whereby it may purchase shares directly or indirectly by way of open market transactions or structured programs, including the use of derivatives, for its own account or through commercial banks or financial institutions. The program, initiated in October 2011, has had a series of authorizations by the Cameron board of directors totaling $3.8 billion since inception. At September 30, 2015, Cameron had remaining authority for future stock purchases totaling approximately $240 million; however, Cameron is prohibited from making any further repurchases under the share repurchase program by the terms of the merger agreement.

Rights of Cameron Stockholders Will Change as a Result of the Merger (page 104)

Cameron stockholders will have different rights once they become Schlumberger stockholders due to differences between Delaware corporate law and Curaçao law and the differences between the governing documents of Schlumberger and Cameron.

 



 

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Material U.S. Federal Income Tax Consequences of the Merger (page 69)

The exchange of Cameron common stock for Schlumberger common stock and cash in the merger will be a taxable transaction for U.S. federal income tax purposes. Therefore, a U.S. Holder (as defined below) generally will recognize capital gain or loss equal to the difference, if any, between (1) the sum of the fair market value of Schlumberger common stock and cash received by such U.S. Holder in the merger, including any cash received in lieu of fractional shares of Cameron common stock, and (2) the U.S. Holder’s adjusted tax basis in its Cameron common stock.

Except in certain specific circumstances described in “The Merger—Material U.S. Federal Income Tax Consequences,” a Non-U.S. Holder (as defined below) generally will not be subject to U.S. federal income tax on any gain recognized on the exchange of Cameron common stock for Schlumberger common stock and cash in the merger.

Please refer to “The Merger—Material U.S. Federal Income Tax Consequences” beginning on page 69 of this proxy statement/prospectus for a description of the material U.S. federal income tax consequences of the merger. Determining the actual tax consequences of the merger to you may be complex and will depend on your specific situation. You should consult your tax advisor for a full understanding of the tax consequences of the merger to you.

Accounting Treatment (page 68)

In accordance with accounting principles generally accepted in the United States, Schlumberger will account for the merger as an acquisition of a business.

Litigation Relating to the Merger (page 75)

Subsequent to the announcement of the merger, Cameron, Cameron’s directors, Schlumberger US, Merger Sub and Schlumberger were named as defendants in four purported class action lawsuits relating to the proposed transaction that were filed in the Court of Chancery of the State of Delaware. These lawsuits were consolidated for all purposes under the caption In re Cameron International Corp. Stockholders Litigation, Case No. 11506-VCN, and a Consolidated Amended Class Action Complaint (the “Consolidated Complaint”) was filed. The Consolidated Complaint generally alleges that Cameron’s directors breached their fiduciary duties to Company stockholders by, among other things, agreeing to enter into the transaction for an allegedly unfair price and as the result of an allegedly unfair process. The Consolidated Complaint also alleges that Cameron, Schlumberger US, Merger Sub and Schlumberger aided and abetted the alleged breaches by Cameron’s directors. The Consolidated Complaint seeks various remedies, including enjoining the merger from being consummated, rescission of the merger to the extent already implemented and the plaintiffs’ costs and fees.

On October 30, 2015, plaintiffs in the consolidated class action moved to expedite discovery and to preliminarily enjoin the consummation of the merger. On November 6, 2015, following Cameron’s agreement to make certain supplemental disclosures, plaintiffs withdrew both their motion for expedited discovery and their motion for a preliminary injunction.

Cameron and Schlumberger expect similar lawsuits may be filed in the future.

Cameron and Schlumberger believe that the lawsuits in which they are named are without merit and intend to defend the lawsuits vigorously.

 



 

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Selected Historical Consolidated Financial Data of Schlumberger

The following table sets forth selected consolidated historical financial information of Schlumberger that has been derived from Schlumberger’s consolidated financial statements as of December 31, 2014, 2013, 2012, 2011 and 2010 and for the years then ended and as of September 30, 2015 and 2014 and for the nine months then ended. This disclosure does not include the effects of the merger.

You should read this financial information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto in Schlumberger’s Annual Report on Form 10-K for the year ended December 31, 2014 and in its Quarterly Report on Form 10-Q for the nine months ended September 30, 2015 incorporated by reference in this document. See the section entitled “Where You Can Find More Information” beginning on page 128 of this proxy statement/prospectus. See also the pro forma information set forth elsewhere in this proxy statement/prospectus regarding the proposed merger with Cameron. Schlumberger’s historical results are not necessarily indicative of results to be expected in future periods.

 

     As of/For the
Nine Months Ended
September 30,
     As of/For the Years Ended December 31,  
     2015      2014      2014      2013      2012      2011      2010  
     (In millions, except per share data)  

STATEMENT OF INCOME DATA

              

Revenue

   $ 27,731       $ 35,939       $ 48,580       $ 45,266       $ 41,731       $ 36,579       $ 26,280   

Income from continuing operations

     3,125         5,393         5,643         6,801         5,230         4,516         4,048   

Diluted earnings per share from continuing operations

   $ 2.42       $ 4.07       $ 4.31       $ 5.10       $ 3.91       $ 3.32       $ 3.21   

BALANCE SHEET DATA

              

Working capital

   $ 7,522       $ 13,085       $ 10,518       $ 12,700       $ 11,788       $ 10,001       $ 7,233   

Total assets

     63,342         68,320         66,904         67,100         61,547         55,201         51,767   

Net debt(1)

     5,204         5,845         5,387         4,443         5,111         4,850         2,638   

Long-term debt

     7,487         11,626         10,565         10,393         9,509         8,556         5,517   

Schlumberger stockholders’ equity

     37,941         40,505         37,850         39,469         34,751         31,263         31,226   

Cash dividends declared per share

   $ 1.50       $ 1.20       $ 1.60       $ 1.25       $ 1.10       $ 1.00       $ 0.84   

 

(1) “Net debt” represents gross debt less cash, short-term investments and fixed income investments, held to maturity. Management believes that net debt provides useful information regarding the level of Schlumberger’s indebtedness by reflecting cash and investments that could be used to repay debt.

 



 

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Selected Historical Consolidated Financial Data of Cameron

The following table sets forth selected consolidated historical financial information of Cameron that has been derived from Cameron’s consolidated financial statements as of December 31, 2014, 2013, 2012, 2011 and 2010 and for the years then ended and as of September 30, 2015 and 2014 and for the nine months then ended. This disclosure does not include the effects of the merger.

You should read this financial information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto in Cameron’s Annual Report on Form 10-K for the year ended December 31, 2014 and in its Quarterly Report on Form 10-Q for the nine months ended September 30, 2015 incorporated by reference in this document. See the section entitled “Where You Can Find More Information” beginning on page 128 of this proxy statement/prospectus. See also the pro forma information set forth elsewhere in this proxy statement/prospectus regarding the proposed merger with Schlumberger. Cameron’s historical results are not necessarily indicative of results to be expected in future periods.

 

     As of/For the
Nine Months Ended
September 30,
     As of/For the Years Ended December 31,  
     2015     2014      2014      2013      2012      2011      2010  
     (In millions, except per share data)  

STATEMENT OF INCOME DATA

                   

Revenue

   $ 6,703      $ 7,577       $ 10,381       $ 9,138       $ 7,795       $ 6,348       $ 5,644   

Income (loss) from continuing operations

     (12     556         822         659         685         465         516   

Diluted earnings (loss) per share from continuing operations

   $ (0.29   $ 2.55       $ 3.83       $ 2.60       $ 2.76       $ 1.87       $ 2.08   

BALANCE SHEET DATA

             

Total assets

   $ 11,609      $ 13,089       $ 12,892       $ 14,249       $ 11,158       $ 9,362       $ 8,005   

Long-term debt

     2,794        2,809         2,819         2,563         2,047         1,574         773   

Other long-term obligations

     389        421         360         510         376         400         266   

Cameron stockholders’ equity

     4,429        4,785         4,555         5,852         5,566         4,707         4,392   

Cash dividends declared per share

   $ —        $ —         $ —         $ —         $ —         $ —         $ —     

 



 

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Selected Unaudited Pro Forma Condensed Combined Financial Information

The following unaudited pro forma condensed combined statements of income information for the nine months ended September 30, 2015 and the year ended December 31, 2014 has been prepared to give effect to the merger as if it had occurred on January 1, 2014. The unaudited pro forma condensed combined balance sheet information as of September 30, 2015 has been prepared to give effect to the merger as if it had occurred on September 30, 2015.

This unaudited pro forma condensed combined financial information has been presented for informational purposes only. The pro forma information is not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the merger been completed as of the dates indicated. In addition, the unaudited pro forma condensed combined financial information does not purport to project the future financial position or operating results of the combined company. Future results may vary significantly from the results reflected because of various factors, including those discussed in “Risk Factors.” The following selected unaudited pro forma condensed combined financial information should be read in conjunction with the “Unaudited Pro Forma Condensed Combined Financial Statements” and related notes included elsewhere in this proxy statement/prospectus.

 

    Nine Months Ended
September 30, 2015
    Year Ended
December 31, 2014
 
    (In millions, except per share amount)  

Pro Forma Condensed Combined Statement of Income Information:

   

Revenue

  $ 34,434      $ 58,961   

Income from continuing operations attributable to Schlumberger/Cameron

    2,957        6,287   

Diluted earnings per share from continuing operations attributable to Schlumberger/Cameron

    2.09        4.35   

 

     As of
September 30, 2015
 
     (In millions)  

Pro Forma Condensed Combined Balance Sheet Information:

  

Total assets

   $ 83,187   

Total debt

     15,309   

Net debt(1)

     9,089   

Total equity

     49,115   

 

(1) “Net debt” represents gross debt less cash, short-term investments and fixed income investments, held to maturity. Management believes that net debt provides useful information regarding the level of Schlumberger’s indebtedness by reflecting cash and investments that could be used to repay debt.

 



 

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Comparative Per Share Data

The following table presents: (1) historical per share information for Schlumberger; (2) pro forma per share information of the combined company after giving effect to the merger; and (3) historical and equivalent pro forma per share information for Cameron for the period indicated.

The combined company pro forma per share information was derived by combining information from the historical consolidated financial statements of Schlumberger and Cameron. You should read this table together with the unaudited pro forma condensed combined financial statements and the notes thereto included in this proxy statement/prospectus and the historical consolidated financial statements of Schlumberger and Cameron that are filed with the Securities and Exchange Commission and incorporated by reference into this proxy statement/prospectus. You should not rely on the pro forma per share information as being necessarily indicative of actual results had the merger occurred on January 1, 2014 for statement of operations purposes or September 30, 2015 for book value per share data. The equivalent pro forma per share information was derived by multiplying the combined company pro forma per share information by the exchange ratio of 0.716.

 

.    Nine Months Ended September 30, 2015  
     Schlumberger      Cameron  
     Historical      Combined
Company
Pro Forma
     Historical     Equivalent
Pro Forma
 

Basic earnings (loss) per share from continuing operations

   $ 2.43       $ 2.10       $ (0.29   $ 1.50   

Diluted earnings (loss) per share from continuing operations

   $ 2.42       $ 2.09       $ (0.29   $ 1.50   

Cash dividends per share

   $ 1.50       $ 1.50       $ —        $ —     

Book value per share at period end

   $ 30.09          $ 23.21     

 

     Year Ended December 31, 2014  
     Schlumberger      Cameron  
     Historical      Combined
Company
Pro Forma
     Historical      Equivalent
Pro Forma
 

Basic earnings per share from continuing operations

   $ 4.36       $ 4.39       $ 3.85       $ 3.14   

Diluted earnings per share from continuing operations

   $ 4.31       $ 4.35       $ 3.83       $ 3.11   

Cash dividends per share

   $ 1.60       $ 1.60       $ —         $ —     

Book value per share at period end

   $ 29.69          $ 22.78      

 



 

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Comparative Per Share Market Price And Dividend Information

The following table sets forth, for the periods indicated, the intra-day high and low sales prices per share for Schlumberger and Cameron common stock as reported on the NYSE, which is the principal trading market for both Schlumberger and Cameron common stock, and the cash dividends declared per share of Schlumberger and Cameron common stock.

 

     Schlumberger Common Stock      Cameron Common Stock  
     High      Low      Cash
Dividends
Declared
     High      Low      Cash
Dividends
Declared
 

2015

                 

Fourth Quarter (through November 13, 2015)

   $ 82.43       $ 66.57       $ 0.5000       $ 71.22       $ 59.49       $ —     

Third Quarter

     86.69         67.75         0.5000         67.12         40.50         —     

Second Quarter

     95.13         83.60         0.5000         56.28         44.79         —     

First Quarter

     89.00         75.60         0.5000         50.25         39.52         —     

2014

                 

Fourth Quarter

   $ 102.40       $ 78.47       $ 0.4000       $ 66.88       $ 44.43       $ —     

Third Quarter

     118.76         100.30         0.4000         74.89         65.88         —     

Second Quarter

     118.13         96.66         0.4000         68.54         60.63         —     

First Quarter

     98.45         85.77         0.4000         64.38         56.51         —     

2013

                 

Fourth Quarter

   $ 94.91       $ 84.91       $ 0.3125       $ 66.09       $ 52.50       $ —     

Third Quarter

     89.73         71.84         0.3125         66.12         54.83         —     

Second Quarter

     77.84         69.08         0.3125         65.51         57.72         —     

First Quarter

     82.00         70.12         0.3125         67.42         56.40         —     

2012

                 

Fourth Quarter

   $ 75.70       $ 66.85       $ 0.2750       $ 57.78       $ 47.62       $ —     

Third Quarter

     78.47         64.19         0.2750         60.00         41.26         —     

Second Quarter

     76.19         59.12         0.2750         53.84         38.38         —     

First Quarter

     80.78         67.12         0.2750         57.65         49.02         —     

The following table sets forth the closing sale price per share of Schlumberger and Cameron common stock as reported on the NYSE as of August 25, 2015, the last trading day before the public announcement of the merger, and as of November 13, 2015, the most recent practicable trading day prior to the date of this proxy statement/prospectus. The table also shows the implied value of the merger consideration proposed for each share of Cameron common stock (including the cash consideration of $14.44 per share, without interest) as of the same dates. This implied value was calculated by adding (1) the product of the closing sale price of Schlumberger common stock on the relevant date and the exchange ratio of 0.716 and (2) the $14.44 per share cash amount.

 

     Schlumberger
Closing Price
     Cameron
Closing Price
     Equivalent
Per Share Value
 

August 25, 2015

   $ 72.52       $ 42.47       $ 66.36   

November 13, 2015

   $ 76.14       $ 66.70       $ 68.96   

The market prices of Schlumberger and Cameron common stock will fluctuate between the date of this proxy statement/prospectus and the completion of the merger. No assurance can be given concerning the market prices of Schlumberger or Cameron common stock before the completion of the merger or Schlumberger common stock after the completion of the merger. Because the exchange ratio is fixed in the merger agreement, the market value of the Schlumberger common stock that Cameron stockholders will receive in connection with the merger may vary significantly from the prices shown in the table above. Accordingly, Cameron stockholders are advised to obtain current market quotations for Schlumberger and Cameron common stock before deciding whether to vote for adoption of the merger agreement.

 



 

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RISK FACTORS

By voting in favor of the proposal to adopt the merger agreement, Cameron stockholders will be choosing to invest in Schlumberger common stock. An investment in Schlumberger common stock involves certain risks. Before deciding how to vote, Cameron stockholders should carefully consider the risks described below, those described in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” and the other information contained in this proxy statement/prospectus or in the documents of Cameron and Schlumberger incorporated by reference into this proxy statement/prospectus, particularly the risk factors set forth in the documents of Cameron and Schlumberger incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information.” In addition to the risks set forth below, new risks may emerge from time to time and it is not possible to predict all risk factors, nor can Cameron or Schlumberger assess the impact of all factors on the merger and the combined company following the merger or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in or implied by any forward-looking statements.

Risks Relating to the Merger

The exchange ratio and per share cash amount are fixed and will not be adjusted in the event of any change in either Cameron’s or Schlumberger’s stock price.

Upon completion of the merger, each share of Cameron common stock issued and outstanding immediately prior to the completion of the merger (other than dissenting shares as described in “The Merger—Appraisal Rights” and other than shares held by Cameron or its subsidiaries) will be canceled and converted automatically into the right to receive (1) 0.716 shares of Schlumberger common stock and (2) $14.44 in cash, without interest, with cash paid in lieu of fractional shares. The exchange ratio and per share cash amount were fixed in the merger agreement and will not be adjusted for changes in the market price of either Cameron common stock or Schlumberger common stock. As such, the value of the merger consideration will depend in part on the price per share of Schlumberger common stock at the time the merger is completed. Changes in the price of Schlumberger common stock prior to the merger will affect the market value of the merger consideration that Cameron stockholders will become entitled to receive on the date of the merger. Neither party is permitted to abandon the merger or terminate the merger agreement solely because of changes in the market price of either party’s common stock. Stock price changes may result from a variety of factors (many of which are beyond Cameron’s or Schlumberger’s control), including:

 

    changes in Cameron’s and Schlumberger’s respective business, operations and prospects;

 

    changes in market assessments of the business, operations and prospects of either company;

 

    market assessments of the likelihood that the merger will be completed, including related considerations regarding regulatory approvals of the merger;

 

    interest rates, general market, industry and economic conditions and other factors generally affecting the price of Cameron’s and Schlumberger’s common stock, including sales prices for oil and gas; and

 

    federal, state and local legislation, governmental regulation and legal developments in the businesses in which Cameron and Schlumberger operate.

The price of Schlumberger common stock at the closing of the merger may vary from its price on the date the merger agreement was executed, on the date of this proxy statement/prospectus and on the date of the special meeting. As a result, the market value represented by the exchange ratio will also vary. For example, based on the range of closing prices of Schlumberger common stock during the period from August 25, 2015 (the last trading day before the public announcement of the merger), through November 13, 2015 (the most recent practicable trading day before the date of this proxy statement/prospectus), the exchange ratio represented a market value ranging from a low of $62.88 to a high of $72.81 for each share of Cameron common stock.

 

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Because the date that the merger is completed will be later than the date of the special meeting, at the time of the special meeting, Cameron stockholders will not know the exact market value of the Schlumberger common stock that they will receive upon completion of the merger.

If the price of Schlumberger common stock declines between the date of the special meeting and the effective time of the merger, including for any of the reasons described above, Cameron stockholders will receive shares of Schlumberger common stock that have a market value upon completion of the merger that is less than the market value calculated pursuant to the exchange ratio on the date of the Cameron special meeting. Therefore, while the number of shares of Schlumberger common stock to be issued and delivered in the merger is fixed, Cameron stockholders cannot be sure of the market value of the Schlumberger common stock they will receive upon completion of the merger. In addition, the market value of the shares of Schlumberger common stock that Cameron stockholders will be entitled to receive in the merger also will continue to fluctuate after the completion of the merger and Cameron stockholders could lose the value of their investment in Schlumberger common stock.

The market price for Schlumberger common stock may be affected by factors different from those that historically have affected the market price of Cameron common stock.

Upon completion of the merger, Cameron stockholders will become Schlumberger stockholders. Schlumberger’s business differs from that of Cameron, and accordingly the results of operations of Schlumberger will be affected by certain factors that are different from those currently affecting the results of operations of Cameron. For a discussion of the businesses of Schlumberger and Cameron and of some important factors to consider in connection with those businesses, see the section entitled “Where You Can Find More Information” for the location of information incorporated by reference into this proxy statement/prospectus.

Cameron stockholders will have a significantly reduced ownership and voting interest after the merger and will exercise less influence over management.

Immediately after the completion of the merger, it is expected that Cameron stockholders, who collectively own 100% of Cameron, will own approximately 10% of Schlumberger based on the number of shares of Cameron common stock and Schlumberger common stock outstanding. Consequently, Cameron stockholders will have less influence over the management and policies of Schlumberger than they currently have over the management and policies of Cameron.

The unaudited pro forma condensed combined financial statements included in this proxy statement/prospectus are presented for illustrative purposes only and the actual financial condition and results of operations of Schlumberger following the merger may differ materially.

The unaudited pro forma condensed combined financial statements contained in this proxy statement/prospectus are presented for illustrative purposes only, are based on various adjustments, assumptions and preliminary estimates, and may not be an indication of Schlumberger’s financial condition or results of operations following the merger for several reasons. The actual financial condition and results of operations of Schlumberger following the merger may not be consistent with, or evident from, these unaudited pro forma condensed combined financial statements. In addition, the assumptions used in preparing the unaudited pro forma financial information may not prove to be accurate, and other factors may affect Schlumberger’s financial condition or results of operations following the merger. Any potential decline in Schlumberger’s financial condition or results of operations may cause significant variations in the stock price of Schlumberger. For more information, see the section entitled “Summary—Selected Unaudited Pro Forma Condensed Combined Financial Information.”

 

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Cameron’s directors and executive officers have interests in the merger that may be different from, and in addition to, the interests of other Cameron stockholders.

Executive officers of Cameron negotiated the terms of the merger agreement with their counterparts at Schlumberger, and the Cameron board of directors determined that entering into the merger agreement was in the best interests of Cameron and its stockholders, declared the merger agreement advisable and recommended that Cameron stockholders approve the proposal to adopt the merger agreement. In considering these facts and the other information contained in this proxy statement/prospectus, you should be aware that Cameron’s directors and executive officers are parties to agreements or participants in other arrangements that give them interests in the merger that may be different from, or in addition to, the interests of the other stockholders of Cameron, which could create conflicts of interest in their determinations to recommend the merger. The Cameron board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement and the transactions contemplated thereby and making its recommendation that Cameron’s stockholders vote in favor of the proposal to adopt the merger agreement. Cameron stockholders should consider these interests in voting on the merger. See the sections entitled “The Merger—Interests of Cameron’s Directors and Executive Officers in the Merger” and “Advisory Vote on Merger-Related Compensation for Cameron’s Named Executive Officers” for additional details regarding these interests.

Schlumberger and Cameron will be subject to business uncertainties and certain operating restrictions until completion of the merger.

In connection with the pending merger, some of the suppliers and customers of Cameron and/or Schlumberger may delay or defer sales and purchasing decisions, which could negatively impact revenues, earnings and cash flows regardless of whether the merger is completed. Additionally, Cameron and Schlumberger have each agreed in the merger agreement to refrain from taking certain actions with respect to their business and financial affairs during the pendency of the merger, which restrictions could be in place for an extended period of time if completion of the merger is delayed and could adversely impact Cameron’s and Schlumberger’s ability to execute certain of their business strategies and their financial condition, results of operations or cash flows. See the section entitled “The Merger Agreement—Conduct of Business Pending the Effective Time” for a description of the restrictive covenants to which each of Schlumberger and Cameron is subject.

Cameron may be unable to attract and retain key employees during the pendency of the merger.

In connection with the pending merger, current and prospective employees of Cameron may experience uncertainty about their future roles with the combined company following the merger, which may materially adversely affect the ability of Cameron to attract and retain key personnel during the pendency of the merger. Key employees may depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the combined company following the merger. Accordingly, no assurance can be given that Cameron will be able to attract and retain key employees to the same extent that Cameron has been able to in the past.

The ability of Cameron and Schlumberger to complete the merger is subject to the approval of Cameron stockholders, certain closing conditions and the receipt of consents and approvals from government entities which may impose conditions that could adversely affect Cameron or Schlumberger or cause the merger to be abandoned.

The merger agreement contains certain closing conditions, including approval of the merger by Cameron stockholders, the absence of injunctions or other legal restrictions and that no material adverse effect shall have occurred with respect to either company.

In addition, Cameron and Schlumberger will be unable to complete the merger until the expiration or termination of the applicable waiting period under the HSR Act and consents and approvals are received from the

 

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European Commission and various other governmental entities. Regulatory entities may impose certain requirements or obligations as conditions for their approval. The merger agreement may require Cameron and/or Schlumberger to accept conditions from these regulators that could adversely impact the combined company. If the regulatory clearances are not received, or they are not received on terms that satisfy the conditions set forth in the merger agreement, then neither Schlumberger nor Cameron will be obligated to complete the merger.

We can provide no assurance that the various closing conditions will be satisfied and that the necessary approvals will be obtained, or that any required conditions will not materially adversely affect the combined company following the merger. In addition, we can provide no assurance that these conditions will not result in the abandonment or delay of the merger.

Failure to complete the merger could negatively impact Cameron and Schlumberger.

If the merger is not completed, the ongoing businesses and the market price of the common stock of Cameron and/or Schlumberger may be adversely affected and Cameron and Schlumberger will be subject to several risks, including Cameron being required, under certain circumstances, to pay Schlumberger US a termination fee of $321 million; Cameron, Schlumberger US or Schlumberger having to pay certain costs relating to the merger; and diverting the focus of management from pursuing other opportunities that could be beneficial to each of Cameron, Schlumberger US and Schlumberger, in each case, without realizing any of the benefits which might have resulted had the merger been completed.

Multiple lawsuits have been filed against Cameron challenging the merger, and an adverse ruling in any such lawsuit may prevent the merger from being completed.

Subsequent to the announcement of the merger, three putative class action lawsuits were commenced on behalf of stockholders of Cameron against Cameron, its directors, Schlumberger US, Merger Sub and Schlumberger. Additional lawsuits with similar allegations may be filed. See “The Merger—Litigation Relating to the Merger” for more information about the lawsuits related to the merger that have been filed.

One of the conditions to the closing of the merger is that no law, order, injunction, judgment, decree, ruling or other similar requirement shall be in effect that prohibits the completion of the merger. Accordingly, if any of the plaintiffs is successful in obtaining an injunction prohibiting the completion of the merger, then such injunction may prevent the merger from becoming effective, or delay its becoming effective within the expected time frame.

The merger agreement contains restrictions on the ability of Cameron to pursue other alternatives to the merger.

The merger agreement contains non-solicitation provisions that, subject to limited exceptions, restrict the ability of Cameron to solicit, initiate, knowingly encourage or knowingly facilitate any competing acquisition proposal. Further, subject to limited exceptions, consistent with applicable law, the merger agreement provides that the Cameron board of directors will not fail to make, withdraw, modify or qualify, or propose publicly to withhold, withdraw, modify or qualify, in any manner adverse to Schlumberger or its affiliates its recommendation that Cameron stockholders vote in favor of the proposal to adopt the merger agreement, and in specified circumstances Schlumberger has a right to negotiate with Cameron in order to match any competing acquisition proposals that may be made. Although the Cameron board of directors is permitted to take certain actions in response to a superior proposal or an acquisition proposal that is reasonably likely to result in a superior proposal if it determines that the failure to do so would be inconsistent with its fiduciary duties, doing so in specified situations could require Cameron to pay to Schlumberger US a termination fee of $321 million. See the section entitled “The Merger Agreement—Certain Additional Agreements—No Solicitation; Recommendation,” the section entitled “The Merger Agreement—Termination, Amendment and Waiver—

 

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Termination” and the section entitled “The Merger Agreement—Termination, Amendment and Waiver—Fees and Expenses” for a more complete discussion of these restrictions and consequences.

Such provisions could discourage a potential acquiror that might have an interest in making a proposal from considering or proposing any such acquisition, even if it were prepared to pay consideration with a higher value than that to be paid in the merger. There also is a risk that the requirement to pay the termination fee or expense payment to Schlumberger US in certain circumstances may result in a potential acquiror proposing to pay a lower per share price to acquire Cameron than it might otherwise have proposed to pay.

Risks Relating to the Combined Company Upon Completion of the Merger

Schlumberger may fail to realize the anticipated benefits of the merger.

The success of the merger will depend on, among other things, Schlumberger’s ability to combine its business with that of Cameron in a manner that facilitates growth opportunities and realizes anticipated synergies. However, Schlumberger must successfully combine the businesses of Schlumberger and Cameron in a manner that permits these benefits to be realized. In addition, Schlumberger must achieve the anticipated synergies without adversely affecting current revenues and investments in future growth. If Schlumberger is not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully, or at all, or may take longer to realize than expected.

The combined company could incur substantial expenses related to the merger and the integration of Cameron and Schlumberger.

Cameron and Schlumberger expect that the combined company will incur substantial expenses in connection with the merger and the integration of their respective businesses, policies, procedures, operations, technologies and systems. There are a large number of systems that must be integrated, including information management, purchasing, accounting and finance, sales, billing, payroll and benefits, fixed asset and lease administration systems and regulatory compliance. There are a number of factors beyond the control of either party that could affect the total amount or the timing of all of the expected integration expenses. Moreover, many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. These expenses could, particularly in the near term, reduce the savings that Schlumberger expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings and revenue enhancements related to the integration of the businesses following the completion of the merger, and accordingly, any anticipated net benefits may not be achieved in the near term or at all. These integration expenses may result in the combined company taking significant charges against earnings following the completion of the merger.

Following the merger, the combined company may be unable to successfully integrate Cameron’s and Schlumberger’s businesses and realize the anticipated benefits of the merger.

The merger involves the combination of two companies that historically have operated and currently operate as independent public companies.

The success of Schlumberger’s acquisition of Cameron will depend in large part on the success of the management of the combined company in integrating the operations, strategies, technologies and personnel of the two companies following the completion of the merger. Schlumberger may fail to realize some or all of the anticipated benefits of the merger if the integration process takes longer than expected or is more costly than expected. The failure of Schlumberger to meet the challenges involved in successfully integrating the operations of Cameron or to otherwise realize any of the anticipated benefits of the merger, including additional cost savings and synergies, could impair the operations of Schlumberger. The combined company will be required to devote management attention and resources to integrating its business practices and operations, and prior to the merger, management attention and resources will be required to plan for such integration.

 

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Potential issues and difficulties the combined company may encounter in the integration process include the following:

 

    the inability to successfully integrate the respective businesses of Cameron and Schlumberger in a manner that permits the combined company to achieve the cost savings and operating synergies anticipated to result from the merger, which could result in the anticipated benefits of the merger not being realized partly or wholly in the time frame currently anticipated or at all;

 

    lost sales and customers as a result of certain customers of either or both of the two companies deciding not to do business with the combined company, or deciding to decrease their amount of business in order to reduce their reliance on a single company;

 

    integrating personnel from the two companies while maintaining focus on providing consistent, high quality products and customer service;

 

    potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the merger; and

 

    performance shortfalls at one or both of the two companies as a result of the diversion of management’s attention caused by completing the merger and integrating the companies’ operations.

Business issues currently faced by one company may be imputed to the operations of the other company.

To the extent that either Schlumberger or Cameron currently has or is perceived by customers to have operational challenges, such as on-time performance, safety issues or workforce issues, those challenges may raise concerns by existing customers of the other company following the merger which may limit or impede Schlumberger’s future ability to obtain additional work from those customers.

Failure to retain key employees and skilled workers could adversely affect Schlumberger following the merger.

Schlumberger’s performance following the merger could be adversely affected if the combined company is unable to retain certain key employees and skilled workers of Cameron. It is possible that these employees may decide not to remain with Cameron while the merger is pending or with the combined company after the merger is consummated. The loss of the services of one or more of these key employees and skilled workers could adversely affect Schlumberger’s future operating results because of their experience and knowledge of Cameron’s business. In addition, current and prospective employees of Schlumberger and Cameron may experience uncertainty about their future roles with the company until after the merger is completed. This may adversely affect the ability of Schlumberger and Cameron to attract and retain key personnel, which could adversely affect Schlumberger’s performance following the merger.

The required regulatory approvals may not be obtained or may contain materially burdensome conditions that could have an adverse effect on Schlumberger.

Completion of the merger is conditioned upon the receipt of certain governmental approvals, including, without limitation, the expiration or termination of the applicable waiting period under the HSR Act, the issuance by the European Commission of a decision under the EC Merger Regulation declaring the merger compatible with the common market and the approval of the merger by the antitrust regulators in other specified jurisdictions. Although Schlumberger and Cameron have agreed in the merger agreement to use their reasonable best efforts to obtain the requisite governmental approvals, there can be no assurance that these approvals will be obtained. In addition, the governmental authorities from which these approvals are required may impose conditions on the completion of the merger or require changes to the terms of the merger.

Under the terms of the merger agreement, Schlumberger has the right, but not the obligation, to oppose or refuse to consent, through litigation or otherwise, to any request, attempt or demand by any governmental entity

 

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or other person for any divestiture, hold separate condition or any other restriction with respect to any assets, businesses or product lines of Schlumberger, Cameron or any of their respective subsidiaries and has the obligation to defend any litigation instituted by a governmental entity or other person with respect to the legality of the merger under applicable regulatory laws. Please see “The Merger Agreement—Certain Additional Agreements—Filings” for more information. If Schlumberger agrees to undertake divestitures or comply with operating restrictions in order to obtain any approvals required to complete the merger, Schlumberger may be less able to realize anticipated benefits of the merger, and the business and results of operations of the combined company after the merger may be adversely affected.

Risks Relating to Schlumberger Common Stock Following the Merger

The market value of Schlumberger common stock could decline if large amounts of its common stock are sold following the merger.

Following the merger, stockholders of Schlumberger and former stockholders of Cameron will own interests in a combined company operating an expanded business with more assets and a different mix of liabilities. Current stockholders of Schlumberger and Cameron may not wish to continue to invest in the combined company, or may wish to reduce their investment in the combined company, in order to comply with institutional investing guidelines, to increase diversification or to track any rebalancing of stock indices in which Schlumberger or Cameron common stock is included. If, following the merger, large amounts of Schlumberger common stock are sold, the price of its common stock could decline.

The merger may not be accretive, and may be dilutive, to Schlumberger’s earnings per share in the near term, which may negatively affect the market price of Schlumberger common stock.

Schlumberger anticipates that the merger will be accretive to earnings per share by the end of the first year after closing. However, the merger may be dilutive to earnings per share in the near term. This expectation is based on preliminary estimates that may materially change. In addition, future events and conditions could decrease or delay any accretion, result in dilution or cause greater dilution than is currently expected, including:

 

    adverse changes in energy market conditions;

 

    commodity prices for oil, natural gas and natural gas liquids;

 

    operating results;

 

    competitive conditions;

 

    laws and regulations affecting the energy business;

 

    capital expenditure obligations; and

 

    general economic conditions.

Any dilution of, or decrease or delay of any accretion to, Schlumberger’s earnings per share could cause the price of Schlumberger’s common stock to decline.

The shares of Schlumberger common stock to be received by Cameron stockholders upon the completion of the merger will have different rights from shares of Cameron common stock.

Upon completion of the merger, Cameron stockholders will no longer be stockholders of Cameron, a Delaware corporation, but will instead become shareholders of Schlumberger, a company organized under the laws of Curaçao, and their rights as shareholders will be governed by Curaçao law and Schlumberger’s articles of incorporation and by-laws. Curaçao law and the terms of Schlumberger’s articles of incorporation and by-laws may be materially different than Delaware law and the terms of Cameron’s restated certificate of incorporation and amended and restated bylaws, which currently govern the rights of Cameron stockholders. Please see “Comparison of Shareholder Rights” for a discussion of the different rights associated with Schlumberger common stock.

 

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Other Risks Relating to Cameron and Schlumberger

Schlumberger and Cameron are, and following completion of the merger, the combined company will continue to be, subject to the risks described above. In addition, Schlumberger is, and will continue to be, subject to the risks described in (A) Part I, Item 1A in Schlumberger’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on January 29, 2015 and (B) Part II, Item 1A in Schlumberger’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, filed with the SEC on October 21, 2015 and Cameron is, and will continue to be, subject to the risks described in (A) Part I, Item 1A in Cameron’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on February 20, 2015, (B) Part II, Item 1A in Cameron’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed with the SEC on April 24, 2015, (C) Part II, Item 1A in Cameron’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed with the SEC on July 24, 2015 and (D) Part II, Item 1A in Cameron’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, filed with the SEC on October 22, 2015, each of which is incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” for the location of information incorporated by reference in this proxy statement/prospectus.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus and the documents incorporated by reference herein include “forward-looking statements” about Schlumberger, Cameron and the combined company within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to as the Securities Act, Section 21E of the Exchange Act, and the Private Securities Litigation Reform Act of 1995. The opinions, forecasts, projections, expected timetable for completing the proposed transaction, benefits and synergies of the proposed transaction, future opportunities for the combined company and products, future financial performance and any other statements regarding Schlumberger’s and Cameron’s future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not statements of historical fact, are forward-looking statements. Similarly, statements that describe future plans, objectives or goals or future revenues or other financial metrics are also forward-looking statements. Although Schlumberger and Cameron believe that the expectations reflected in such forward-looking statements are reasonable, they can give no assurances that such expectations will prove to have been correct. These statements are subject to, among other things, satisfaction of the closing conditions to the merger, the risk that the contemplated merger does not occur, negative effects from the pendency of the merger, the ability to successfully integrate the merged businesses and to realize expected synergies, the risk that Schlumberger and Cameron will not be able to retain key employees, expenses of the merger, the timing to consummate the proposed transaction, the ability to successfully integrate the merged businesses and other risk factors.

Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “would,” “should,” “plans,” “likely,” “expects,” “anticipates,” “intends,” “believes,” “estimates,” “thinks,” “may” and similar expressions, are forward-looking statements. The following important factors, in addition to those discussed under “Risk Factors” and elsewhere in this proxy statement/prospectus and the documents incorporated by reference herein, could affect the future results of the energy industry in general, and Schlumberger after the merger in particular, and could cause those results to differ materially from those expressed in or implied by such forward-looking statements:

 

    global economic conditions;

 

    changes in exploration and production spending by the companies’ customers and changes in the level of oil and natural gas exploration and development;

 

    general economic, political, social and business conditions in key regions of the world, including Russia and Ukraine;

 

    pricing erosion;

 

    weather and seasonal factors;

 

    operational delays;

 

    production declines;

 

    changes in government regulations and regulatory requirements, including those related to offshore oil and gas exploration, radioactive sources, explosives, chemicals, hydraulic fracturing services, technology and climate-related initiatives;

 

    the inability of technology to meet new challenges in exploration;
    overall demand for, and pricing of, the companies’ products;

 

    the size and timing of orders;

 

    the companies’ ability to successfully execute large subsea and drilling projects they have been awarded;

 

    the possibility of cancellations of orders in backlog;

 

    the companies’ ability to convert backlog into revenues on a timely and profitable basis;

 

    warranty and product liability claims;

 

    the impact of acquisitions the companies have made or may make;

 

    changes in the price of (and demand for) oil and gas in both domestic and international markets;

 

    raw material costs and availability;

 

    fluctuations in currency markets worldwide;
 

 

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    Schlumberger’s ability to integrate the operations of Cameron;

 

    the amount and timing of any cost savings synergies or other efficiencies expected to result from the merger;

 

    failure to retain certain key employees and skilled workers;

 

    future and pro forma financial condition or results of operations and future revenues and expenses;

 

    the ability to complete the merger on the anticipated terms and timetable;

 

    regulatory conditions which may be imposed as a condition to approval of the merger;
    other risks described under the caption “Risk Factors” in Schlumberger’s and Cameron’s Annual Reports on Form 10-K for the year ended December 31, 2014 and subsequent Quarterly Reports on Form 10-Q; and

 

    the various risks and other factors considered by the respective boards of Schlumberger and Cameron as described under “The Merger—Cameron’s Reasons for the Merger; Recommendation of the Cameron Board of Directors” and under “The Merger—Schlumberger’s Reasons for the Merger.”
 

 

The foregoing list of factors should not be construed to be exhaustive. Many factors mentioned in this proxy statement/prospectus, including the risks outlined under the caption “Risk Factors” contained in the Exchange Act reports of Schlumberger and Cameron, incorporated herein by reference, will be important in determining future results, and actual future results may vary materially.

All subsequent written and oral forward-looking statements attributable to Schlumberger or Cameron or to persons acting on their behalf are expressly qualified in their entirety by reference to these risks and uncertainties. There is no assurance that the actions, events or results of the forward-looking statements will occur, or, if any of them do, when they will occur or what effect they will have on the results of operations, financial condition, cash flows or distributions of Schlumberger or Cameron. In light of these uncertainties, you should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and neither Schlumberger nor Cameron undertakes any obligation to publicly update or revise any forward-looking statements except as required by law.

For additional information with respect to these factors, see “Where You Can Find More Information.”

 

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THE COMPANIES

Cameron International Corporation

Cameron provides flow equipment products, systems and services to worldwide oil and gas industries. Cameron’s business is segregated into four business segments: Subsea, Surface, Drilling and Valves & Measurement (V&M).

Cameron’s common stock is listed on the NYSE, where it is traded under the symbol “CAM.”

Cameron was incorporated in the state of Delaware in November 1994. Cameron’s executive offices are headquartered at 1333 West Loop South, Suite 1700, Houston, Texas 77027, and its telephone number is (713) 513-3300.

Schlumberger Limited (Schlumberger N.V.)

Founded in 1926, Schlumberger is the world’s leading supplier of technology, integrated project management and information solutions to the international oil and gas exploration and production industry. Having invented wireline logging as a technique for obtaining downhole data in oil and gas wells, Schlumberger today provides the industry’s widest range of products and services from exploration through production. As of December 31, 2014, Schlumberger employed approximately 120,000 people of over 140 nationalities operating in approximately 85 countries.

Schlumberger operates in each of the major oilfield service markets, managing its business through three Groups: Reservoir Characterization, Drilling and Production. Each Group consists of a number of technology-based service and product lines, or Technologies. These Technologies cover the entire life cycle of the reservoir and correspond to a number of markets in which Schlumberger holds leading positions. The business is also reported through four geographic Areas: North America, Latin America, Europe/CIS/Africa and Middle East & Asia. Within these Areas, a network of GeoMarket regions provides logistical, technical and commercial coordination.

Schlumberger’s common stock is primarily listed on the NYSE, where it is traded under the symbol “SLB.” Schlumberger’s common stock is also listed on the Euronext Paris, London and SIX Swiss stock exchanges.

Schlumberger has principal executive offices in Paris, Houston, London and The Hague. Its principal executive offices in the United States are located at 5599 San Felipe, 17th Floor, Houston, Texas 77056, and its telephone number is (713) 513-2000.

Schlumberger Holdings Corporation

Formed in 2010, Schlumberger US is a Delaware corporation and is an indirect wholly-owned subsidiary of Schlumberger. Schlumberger US is the parent company of Schlumberger’s U.S. subsidiaries that conduct Schlumberger’s U.S. operations.

Schlumberger US’s executive offices are located at 300 Schlumberger Drive, Sugar Land, Texas 77478, and its telephone number is (713) 513-2000.

Rain Merger Sub LLC

Merger Sub is a Delaware limited liability company and a direct wholly-owned subsidiary of Schlumberger US. Merger Sub was formed solely for the purpose of participating in the merger and has conducted no activities other than in connection with the merger.

 

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THE SPECIAL MEETING

General

This proxy statement/prospectus is being provided to the stockholders of Cameron as part of a solicitation of proxies by the Cameron board of directors for use at the special meeting to be held at the time and place specified below, and at any adjournment or postponement thereof. This proxy statement/prospectus provides stockholders of Cameron with the information they need to know to be able to vote or instruct their vote to be cast at the special meeting.

Date, Time and Place

The special meeting will be held at Cameron’s corporate headquarters, 1333 West Loop South, Suite 1700, Houston, Texas 77027, on Thursday, December 17, 2015 at 10:00 a.m. local time.

Purpose of the Special Meeting

At the special meeting, Cameron stockholders will be asked to consider and vote on:

 

    Proposal No. 1: a proposal to adopt the merger agreement;

 

    Proposal No. 2: a proposal to approve, by non-binding, advisory vote, the compensation that may become payable to Cameron’s named executive officers in connection with the merger; and

 

    Proposal No. 3: a proposal to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the proposal to adopt the merger agreement at the time of the special meeting.

Only the approval of Proposal No. 1 is required for the completion of the merger.

Recommendation of the Cameron Board

After careful consideration, the Cameron board of directors has unanimously approved and declared advisable the merger agreement, the merger and all of the other transactions contemplated by the merger agreement; declared that it is in the best interests of Cameron and its stockholders to enter into the merger agreement and consummate the merger and all of the other transactions contemplated by the merger agreement; directed that adoption of the merger agreement be submitted to a vote at a meeting of the Cameron stockholders; and recommended that the Cameron stockholders vote to adopt the merger agreement. ACCORDINGLY, THE CAMERON BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSAL TO ADOPT THE MERGER AGREEMENT, A VOTE “FOR” THE ADVISORY PROPOSAL CONCERNING THE MERGER-RELATED COMPENSATION ARRANGEMENTS FOR CAMERON’S NAMED EXECUTIVE OFFICERS AND A VOTE “FOR” THE PROPOSAL TO ADJOURN THE SPECIAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES.

Record Date; Stockholders Entitled to Vote

The Cameron board of directors has fixed the close of business on November 16, 2015 as the record date for determination of Cameron stockholders entitled to receive notice of, and to vote at, the special meeting or any adjournments or postponements thereof. Only holders of record of issued and outstanding Cameron common stock at the close of business on the record date are entitled to receive notice of, and to vote at, the special meeting or any adjournments or postponements thereof.

At the close of business on the record date, there were approximately 191,115,313 shares of Cameron common stock issued and outstanding and entitled to vote at the special meeting. Cameron stockholders are entitled to one vote for each share of Cameron common stock they owned as of the close of business on the record date.

 

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Voting by Cameron’s Directors and Executive Officers

At the close of business on November 13, 2015, the most recent practicable date prior to the date of this proxy statement/prospectus, directors and executive officers of Cameron were expected to be entitled to vote approximately 2,883,636 shares of Cameron common stock, or approximately 1.5% of the shares of Cameron common stock outstanding on that date. We currently expect that Cameron’s directors and executive officers will vote their shares in favor of each of the proposals to be considered at the special meeting, although none of them has entered into any agreement obligating them to do so.

Quorum

A majority of the shares of Cameron common stock issued and outstanding as of the close of business on the record date and entitled to vote, present in person or represented by proxy, at the special meeting will constitute a quorum for the special meeting. At any adjourned meeting at which a quorum shall be present, any business may be transacted that might have been transacted at the original meeting.

Abstentions are counted as present for purposes of determining whether a quorum is present. Shares represented by broker non-votes are not counted for purposes of determining whether a quorum is present unless the nominee has been instructed to vote on at least one of the proposals presented in this proxy statement/prospectus. A broker non-vote occurs when a nominee holds shares for a beneficial owner but cannot vote on a proposal because the nominee does not have the discretionary power to do so and has not received instructions from the beneficial owner. If you hold shares of Cameron common stock in “street name” and you provide your bank, broker, trust company or other nominee with instructions as to how to vote your shares or obtain a legal proxy from such bank, broker, trust company or other nominee to vote your shares in person at the special meeting, then your shares will be counted as part of the quorum.

Required Vote

Approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the shares of Cameron common stock outstanding and entitled to vote thereon. Shares not present, and shares present and not voted, whether by broker non-vote, abstention or otherwise, will have the same effect as votes cast “AGAINST” the proposal to adopt the merger agreement.

Approval of the advisory compensation proposal and the approval of the proposal to adjourn the special meeting, if necessary, to solicit additional proxies each require the affirmative vote of the holders of a majority of the shares of Cameron common stock represented at the special meeting and entitled to vote on such proposal. Votes to abstain will have the same effect as votes cast “AGAINST” the advisory proposal concerning merger-related compensation arrangements for Cameron’s named executive officers or the proposal to adjourn the special meeting, if necessary, to solicit additional proxies. Shares not present and broker non-votes will have no effect on the advisory proposal concerning merger-related compensation arrangements for Cameron’s named executive officers, assuming a quorum is present, or the proposal to adjourn the special meeting, if necessary, to solicit additional proxies.

Failure to Vote, Broker Non-Votes and Abstentions

In accordance with the rules of the NYSE, brokers, banks, trust companies and other nominees who hold shares of Cameron common stock in “street name” for their customers but do not have discretionary authority to vote the shares may not exercise their voting discretion with respect to the proposal to adopt the merger agreement. Accordingly, if brokers, banks, trust companies or other nominees do not receive specific voting instructions from the beneficial owner of such shares, they may not vote such shares with respect to the proposal to adopt the merger agreement.

 

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If you fail to vote, fail to instruct your broker, bank, trust company or other nominee to vote, or mark your proxy or voting instructions to abstain, it will have the effect of a vote “AGAINST” the proposal to adopt the merger agreement.

If you fail to vote or fail to instruct your broker, bank, trust company or other nominee to vote, it will have no effect on the advisory proposal concerning merger-related compensation arrangements for Cameron’s named executive officers, assuming a quorum is present, or the proposal to adjourn the special meeting, if necessary, to solicit additional proxies. If you mark your proxy or voting instructions to abstain it will have the same effect of a vote “AGAINST” the advisory proposal concerning merger-related compensation arrangements for Cameron’s named executive officers and the proposal to adjourn the special meeting, if necessary, to solicit additional proxies.

How to Vote Your Shares

Registered stockholders may vote in person at the special meeting or by proxy, in one of three ways: (1) through the Internet by logging onto the website indicated on the enclosed proxy card and following the prompts using the Control Number located on the proxy card; (2) by telephone (within the United States, US territories and Canada) using the toll-free telephone number listed on the enclosed proxy card; or (3) by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If your shares are held in the name of a bank, broker, trust company or other nominee, follow the instructions you receive from your nominee on how to vote your shares.

Voting in Person

A government-issued picture identification will be required to enter the special meeting. If you are the representative of a corporate or institutional stockholder, you must present valid photo identification along with proof that you are the representative of such stockholder. If your shares are held by a bank, broker, trust company or other nominee, you will be required to present evidence of your ownership of shares, which you can obtain from your broker, bank, trust company or other nominee.

Voting of Proxies

When you provide your proxy, the shares of Cameron common stock represented by the proxy will be voted in accordance with your instructions. If you sign your proxy card without giving instructions, you will have granted authority to the named proxies solicited by Cameron, which we refer to as named proxies, to vote “FOR” each of the proposal to adopt the merger agreement, the advisory proposal concerning merger-related compensation arrangements for Cameron’s named executive officers and the proposal to adjourn the special meeting, if necessary, to solicit additional proxies. In all cases, the delivery of a signed proxy card shall confer authority upon the named proxies to vote your shares in accordance with their judgment on any other matters properly presented at the special meeting, except that any proxy that is marked “AGAINST” the proposal to adopt the merger agreement will not be voted “FOR” any proposal to adjourn the special meeting. The Cameron board of directors currently knows of no other business that will be presented for consideration at the special meeting.

YOUR VOTE IS IMPORTANT. ACCORDINGLY, PLEASE SUBMIT YOUR PROXY PROMPTLY BY TELEPHONE, BY INTERNET OR BY MAIL, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON.

Shares Held in the Cameron and OneSubsea Retirement Savings Plans

Shares of common stock held in our Retirement Savings Plans are held of record and are voted by the trustee of the Retirement Savings Plans at the direction of Retirement Savings Plan participants. Participants in the Retirement Savings Plans will be provided with a full paper set of proxy materials. Participants in the

 

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Retirement Savings Plans may direct the trustee of the plans as to how to vote shares allocated to their Retirement Savings Plan accounts. If you do not provide voting instructions, the trustee will vote shares allocated to your plan account in the same proportion as those votes cast by plan participants submitting voting instructions considered as a group.

The cutoff date for voting for participants in the Retirement Savings Plans is December 15, 2015. Stock owned in these plans may NOT be voted in person at the special meeting as the trustee of the plan votes the plan shares two business days prior to the special meeting, after receiving voting instructions from the plan participants.

Revocation of Proxies

You may revoke your proxy at any time prior to a vote at the special meeting by:

 

    notifying Cameron’s Corporate Secretary in writing;

 

    signing and returning a proxy card with a later date;

 

    subsequently voting by Internet or telephone; or

 

    attending the special meeting and revoking the proxy.

Your attendance at the special meeting will not by itself revoke your proxy.

Written notices of revocation and other communications with respect to the revocation of proxies should be addressed as follows:

Cameron International Corporation

Attention: Corporate Secretary

1333 West Loop South, Suite 1700

Houston, Texas 77027

Please note that if your shares are held in the name of a broker, bank, trust company or other nominee, you may change your voting instructions by submitting new voting instructions to your broker, bank, trust company or other nominee in accordance with its established procedures. If your shares are held in the name of a broker, bank, trust company or other nominee and you decide to change your vote by attending the special meeting and voting in person, your vote in person at the special meeting will not be effective unless you have obtained and present a “legal proxy” executed in your favor from the record holder (your broker, bank, trust company or other nominee).

Tabulation of Votes

Cameron has hired a third party, Computershare Trust Company, N.A., to serve as the inspector of election for the special meeting. The inspector of election will, among other matters, determine the number of shares represented at the special meeting to confirm the existence of a quorum and tabulate votes cast.

Solicitation of Proxies

Directors, present and former officers and other employees of Cameron may solicit proxies by telephone, facsimile or mail, or by meetings with stockholders or their representatives. Cameron will reimburse brokers, banks or other custodians, nominees and fiduciaries for their charges and expenses in forwarding proxy material to beneficial owners. Cameron has retained D.F. King & Co., Inc. to assist with the solicitation of proxies for the special meeting for a fee not to exceed $12,500, plus reimbursement for out-of-pocket expenses. All expenses of solicitation of proxies will be borne by Cameron.

 

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Adjournments

The special meeting may adjourn to reconvene at the same or some other place. Under the Cameron bylaws, if a quorum is not present or represented at the special meeting, the stockholders entitled to vote thereat, present in person or represented by proxy, have the authority to adjourn the special meeting, without notice other than announcement at the special meeting. At the adjourned special meeting, Cameron may transact any business which might have been transacted at the original special meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned special meeting, notice of the adjourned special meeting shall be given to each stockholder of record entitled to vote at the special meeting.

 

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PROPOSALS

Proposal No. 1—Adoption of the Merger Agreement

(Item 1 on the Cameron proxy card)

This proxy statement/prospectus is being furnished to you as a stockholder of Cameron as part of the solicitation of proxies by the Cameron board of directors for use at the special meeting to consider and vote upon a proposal to adopt the merger agreement, which is attached as Annex A to this proxy statement/prospectus.

The merger cannot be completed without the approval of the proposal to adopt the merger agreement by the affirmative vote of the holders of a majority of the shares of Cameron common stock outstanding and entitled to vote on the matter at the special meeting. If you do not vote, the effect will be the same as a vote “AGAINST” the proposal to adopt the merger agreement.

The Cameron board of directors, after careful consideration, has (1) approved and declared advisable the merger agreement, the merger and all of the other transactions contemplated by the merger agreement and (2) declared that it is in the best interests of Cameron and its stockholders that Cameron enter into the merger agreement and consummate the merger and all of the other transactions contemplated by the merger agreement.

The Cameron board of directors accordingly unanimously recommends that Cameron stockholders vote “FOR” the proposal to adopt the merger agreement.

Proposal No. 2—Advisory (Non-Binding) Vote on Compensation

(Item 2 on the Cameron proxy card)

The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010, requires that Cameron provide stockholders with the opportunity to cast a non-binding, advisory vote on the compensation that may become payable to Cameron’s named executive officers in connection with the merger, as disclosed in this proxy statement/prospectus, including as described in “The Merger—Interests of Cameron’s Directors and Executive Officers in the Merger.” This vote is commonly referred to as a “golden parachute say on pay” vote. This non-binding, advisory proposal relates only to already existing contractual obligations of Cameron that may result in a payment to Cameron’s named executive officers in connection with, or following, the consummation of the merger, and does not relate to any new compensation or other arrangements between Cameron’s named executive officers and Schlumberger. Further, this proposal does not relate to any compensation arrangement that may become applicable to Cameron’s directors or executive officers who are not named executive officers.

As an advisory vote, this proposal is not binding upon Cameron or the Cameron board of directors, and approval of this proposal is not a condition to completion of the merger. The vote on executive compensation payable in connection with the merger is a vote separate and apart from the vote to adopt the merger agreement. Accordingly, you may vote to adopt the merger agreement and vote not to approve the advisory proposal concerning the merger-related compensation for Cameron’s named executive officers and vice versa. Because the vote is advisory in nature only, it will not be binding on Cameron. To the extent that Cameron is contractually obligated to pay the compensation, such compensation will be payable, subject only to the conditions applicable thereto, if the merger is consummated and regardless of the outcome of the advisory vote. These payments are a part of Cameron’s comprehensive executive compensation program and are intended to align Cameron’s named executive officers’ interests with yours as stockholders by ensuring their continued retention and commitment during critical events such as the merger, which may create significant personal uncertainty for them.

The Cameron board of directors unanimously recommends a vote “FOR” the approval on an advisory (non-binding) basis of the compensation that may become payable to Cameron’s named executive officers in connection with the merger, as disclosed in this proxy statement/prospectus.

 

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Proposal No. 3—Possible Adjournment to Solicit Additional Proxies, if Necessary

(Item 3 on the Cameron proxy card)

The special meeting may be adjourned to another time and place to permit further solicitation of proxies, if necessary, to obtain additional votes to approve the proposal to adopt the merger agreement. Cameron currently does not intend to propose adjournment of the special meeting if there are sufficient votes to approve the proposal to adopt the merger agreement.

Cameron is asking you to authorize the holder of any proxy solicited by Cameron’s board of directors to vote in favor of any adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the proposal to adopt the merger agreement at the time of the special meeting.

The Cameron board of directors unanimously recommends that you vote “FOR” any adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the proposal to adopt the merger agreement.

 

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THE MERGER

Background of the Merger

Cameron and Schlumberger both periodically review and assess their respective industry and strategic alternatives available to enhance stockholder value. As leading companies in their respective lines of business, Cameron and Schlumberger are generally familiar with each other’s businesses and have, from time to time, discussed and engaged in both commercial and strategic transactions with each other. In addition, representatives of Cameron and Schlumberger meet regularly at committee meetings of, and otherwise with respect to the operation of, OneSubsea, a joint venture which Cameron and Schlumberger formed in 2013 to manufacture and develop products, systems and services for the subsea oil and gas market. The frequent interaction between representatives of Cameron and Schlumberger in connection with the OneSubsea joint venture has increased the familiarity of Cameron and Schlumberger with each other’s businesses, operations and management teams.

In November 2014, Schlumberger indicated to Cameron that it would be interested in making a strategic equity investment in Cameron. After consideration of Schlumberger’s proposal and following consultation with members of the Cameron board of directors, Cameron management advised Schlumberger that Cameron would not be interested in such a strategic equity investment. Schlumberger did not pursue its proposal further and there were no further material discussions between Cameron and Schlumberger regarding Schlumberger’s equity investment proposal.

On April 16, 2015, Schlumberger management made a presentation to the Schlumberger board of directors regarding the possibility of a business combination with Cameron and the potential synergies that might be realized. The finance committee of the Schlumberger board of directors, which had previously reviewed the proposed transaction, provided its recommendation to the board; after discussion the Schlumberger board of directors authorized Schlumberger management to approach Cameron.

On April 29, 2015, Mr. Paal Kibsgaard, the Chairman and Chief Executive Officer of Schlumberger, met with Mr. Jack Moore, the Chairman and Chief Executive Officer of Cameron, after attending a committee meeting for the OneSubsea joint venture. At that meeting, Mr. Kibsgaard informed Mr. Moore that Schlumberger was interested in acquiring Cameron and that Mr. Kibsgaard would be sending Mr. Moore a letter outlining Schlumberger’s formal offer. Mr. Kibsgaard discussed with Mr. Moore Schlumberger’s rationale for the proposed transaction and the benefits he expected such a transaction would offer both Cameron and Schlumberger and their respective stockholders, but he did not discuss how Schlumberger valued Cameron or any other terms of the proposed transaction. Mr. Moore informed Mr. Kibsgaard that he would review any offer with the Cameron board of directors and the Cameron management team.

On April 30, 2015, Mr. Kibsgaard sent a letter to Mr. Moore in which Schlumberger proposed to acquire Cameron for $68.00 per share of Cameron common stock, comprised of 50% cash and 50% shares of Schlumberger. Schlumberger’s April 30 proposal represented a premium of approximately 24% to the last close of Cameron common stock prior to the letter. Based on the $94.61 closing price of Schlumberger common stock on April 30, 2015, the proposal implied an exchange ratio of approximately 0.359 shares of Schlumberger common stock plus $34.00 in cash per share of Cameron common stock as of April 30, 2015. Based upon Schlumberger’s proposal, upon completion of the merger, Cameron stockholders would own approximately 5% of the combined company. On April 30, 2015, the West Texas Intermediate (WTI) spot price of oil as quoted on the New York Mercantile Exchange (NYMEX) was $59.63 per barrel.

On May 1, 2015, the Cameron board of directors met to discuss Schlumberger’s April 30 proposal to acquire Cameron. Members of Cameron management, representatives of Credit Suisse, a long-time financial advisor to Cameron, and representatives of Cravath, Swaine & Moore LLP, which is referred to as Cravath in this proxy statement/prospectus, Cameron’s legal advisor, also attended this meeting. Mr. Moore informed the Cameron board of directors that while Schlumberger’s proposal would be discussed in more detail at its regularly scheduled board of directors meeting on May 7–8, he wanted to provide the Cameron board of directors with an

 

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overview of Schlumberger’s April 30 letter, a copy of which had been distributed to the members of the board of directors in advance of the meeting, and his discussions with Mr. Kibsgaard regarding Schlumberger’s proposal. The Cameron board of directors, with the assistance of members of Cameron management and representatives of Credit Suisse and Cravath, discussed, among other things, the terms of Schlumberger’s proposal, the strategic and industrial logic of such a transaction, the value and form of consideration being offered by Schlumberger, the recent stock price performance of both Cameron and Schlumberger, the state of the oil and gas markets and the likelihood that a transaction could be completed.

Following this discussion, the Cameron board of directors determined that while it understood the industrial logic of a potential business combination with Schlumberger and would be open to considering such a transaction, the value proposed by Schlumberger in its April 30 letter was insufficient. The Cameron board of directors also decided to discuss the possibility of entering into discussions with Schlumberger at its regularly scheduled meeting on May 7–8, 2015. The Cameron board of directors instructed Mr. Moore to contact Mr. Kibsgaard to convey the response of the Cameron board of directors.

Following the meeting of the Cameron board of directors, on the evening of May 1, 2015, Mr. Moore informed Mr. Kibsgaard that the Cameron board of directors had met to discuss Schlumberger’s proposed transaction as set forth in Mr. Kibsgaard’s April 30 letter and that while the Cameron board of directors understood the industrial logic of a combination of Cameron and Schlumberger, the Cameron board of directors viewed the value offered by Schlumberger to Cameron’s stockholders as not being sufficient to warrant engaging in further discussions.

On May 5, 2015, Mr. Kibsgaard called and sent a letter to Mr. Moore to inform him that he was pleased that the Cameron board of directors understood the industrial logic of the proposed transaction and that Schlumberger could consider increasing the value of its proposal if it were provided the opportunity to engage in limited due diligence and to engage in discussions with Cameron’s management providing a more in-depth review of Cameron’s businesses.

On May 7–8, 2015, at a regularly scheduled meeting of the Cameron board of directors, the Cameron board of directors continued its discussion of Schlumberger’s proposed acquisition of Cameron. Members of Cameron’s management and representatives of Credit Suisse and Cravath also attended the meeting. As he had done at the prior Cameron board of directors meeting, Mr. Moore reviewed with the Cameron board of directors the terms of Schlumberger’s offer. Mr. Moore also updated the board of directors on his discussions with Mr. Kibsgaard following the prior meeting of the Cameron board of directors. Representatives of Cravath provided a review of the fiduciary duties of the Cameron board of directors in considering the proposed transaction. The representatives of Cravath also reviewed with the Cameron board of directors certain key terms of the OneSubsea joint venture. Mr. Charles Sledge, the Chief Financial Officer of Cameron, reviewed with the Cameron board of directors the updated set of five-year projections that he and the rest of senior management had prepared for purposes of evaluating the potential transaction (which are referred to in this proxy statement/prospectus as the Company Forecasts—May (see the section entitled “The Merger—Financial Forecasts”)). On May 7, 2015, the WTI spot price of oil as quoted on the NYMEX was $58.94 per barrel.

Also at the meeting, representatives of Credit Suisse reviewed financial information regarding Cameron, Schlumberger and the financial terms of the proposed transaction.

The Cameron board of directors discussed the financial terms of Schlumberger’s proposal, the likelihood that the transaction could be successfully completed and potential responses to the proposal. The Cameron board of directors considered alternatives to a business combination transaction, including continuing its existing OneSubsea joint venture business with Schlumberger as part of the execution of Cameron’s strategic plan as a standalone company. The Cameron board of directors also considered whether there might be other potential acquirors that would have the financial capability and willingness to meet or exceed the value of the Schlumberger proposal and concluded that while that was an unlikely outcome, it was important to allow for such an opportunity to emerge if Cameron were to ultimately reach an agreement with Schlumberger.

 

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Following discussion, the Cameron board of directors decided that Cameron should provide additional information to Schlumberger to assist Schlumberger with its analysis of Cameron so that Schlumberger could determine whether it would improve its proposal and directed Cameron management to proceed in that regard. The Cameron board of directors also instructed Mr. Moore to communicate to Schlumberger that it believed that the value Schlumberger placed on Cameron was insufficient, and that Cameron expected Schlumberger to be able to improve its offer upon receiving additional information regarding Cameron’s business and operations, including Cameron’s financial forecasts.

On May 14, 2015, Mr. Moore and Mr. Kibsgaard agreed to schedule a meeting between members of senior management of Cameron and Schlumberger so that Cameron could provide Schlumberger with additional information regarding Cameron’s business and operations. In preparation for the meeting, Cameron management, in consultation with certain members of the Cameron board of directors, developed a set of financial forecasts to be provided to Schlumberger, which were based on the Company Forecasts—May, modified to reflect more optimistic but still realistic assumptions regarding Cameron’s future results and market conditions in the oil and gas industry, including more optimistic assumptions regarding the pace of recovery in drilling activity levels and capital spending by oil and gas production companies (such modified forecasts are referred to in this proxy statement/prospectus as the Transaction Forecasts (see the section entitled “The Merger—Financial Forecasts”)).

On May 21, 2015, Mr. Sledge and Mr. Simon Ayat, the Chief Financial Officer of Schlumberger, met for lunch. Among the topics discussed at that lunch meeting was the proposed transaction. Mr. Ayat explained Schlumberger’s rationale for the proposed transaction and for the financial terms of the Schlumberger proposal. Mr. Sledge reiterated that the value Schlumberger had placed on Cameron was insufficient.

In connection with the discussions of a potential transaction, Cameron and Schlumberger entered into a confidentiality agreement dated June 11, 2015.

On June 16, 2015, Mr. Sledge and Mr. R. Scott Rowe, the Chief Operating Officer of Cameron, gave a presentation regarding Cameron’s business and operations, which included the Transaction Forecasts, to representatives of Schlumberger. On June 16, 2015, the WTI spot price of oil as quoted on the NYMEX was $59.97 per barrel.

At the conclusion of this presentation, a representative of Schlumberger informed the representatives of Cameron management that any improvement in the Schlumberger proposal would require the approval of the Schlumberger board of directors and that the possibility of such an improvement would be discussed at the Schlumberger board of directors’ regularly scheduled meeting in mid-July.

On June 17, 2015, Mr. Moore provided an update to the Cameron board of directors regarding the June 16 meeting with Schlumberger.

Cameron and Credit Suisse entered into an engagement letter dated as of June 18, 2015, pursuant to which Cameron engaged Credit Suisse as its financial advisor in connection with a potential transaction involving Cameron, including a potential acquisition by or merger with Schlumberger or its affiliates.

On June 30, 2015, Mr. Sledge and Mr. Ayat met for lunch. At that lunch meeting, Mr. Ayat and Mr. Sledge discussed follow up questions Mr. Ayat had regarding the June 16 presentation.

On July 15, 2015, the Schlumberger board of directors held a regularly scheduled quarterly meeting at which Schlumberger management provided an update on the proposed transaction with Cameron. After discussion, the Schlumberger board of directors confirmed their interest in pursuing a transaction with Cameron and directed Schlumberger management to continue negotiations.

 

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On July 29, 2015, Mr. Moore and Mr. Kibsgaard met to discuss the potential transaction. Mr. Kibsgaard reported that the Schlumberger board of directors continued to believe that a combination of the two companies was highly compelling and in the best interests of the stockholders of both companies but noted difficulties in the oil and gas industry that made it difficult for Schlumberger to improve its proposal. Mr. Kibsgaard inquired whether Mr. Moore was able to give an indication as to a value at which Cameron would agree to a transaction. Mr. Moore declined to provide a value and indicated that he would discuss any proposal received from Schlumberger with the Cameron board of directors. On July 29, 2015, the WTI spot price of oil as quoted on the NYMEX was $48.79 per barrel.

On August 4, 2015, Cameron received a letter from Schlumberger in which Schlumberger reaffirmed its proposal to acquire Cameron for $68.00 per share of Cameron common stock, comprised of 50% cash and 50% shares of Schlumberger. Schlumberger’s letter stated that its August 4 proposal represented a greater premium than that contained in Schlumberger’s April 30 proposal based on the last closing price of Cameron’s common stock prior to each proposal, due to changes in each company’s respective trading price since Schlumberger’s initial proposal on April 30, 2015. Schlumberger’s August 4 proposal represented a premium of approximately 38% to the last close of Cameron’s common stock prior to the letter. Schlumberger’s August 4 letter also suggested that the parties meet in person on August 14 and 15 for a negotiation of all key commercial terms. Based on the $82.27 closing price of Schlumberger common stock on August 4, 2015, the proposal implied an exchange ratio of approximately 0.413 shares of Schlumberger common stock plus $34.00 in cash per share of Cameron common stock as of August 4, 2015. Due to the decline in the price of Schlumberger’s common stock since Schlumberger submitted its initial proposal on April 30, 2015, the August 4 proposal represented an increase of approximately 15% in the number of shares of Schlumberger common stock to be issued per share of Cameron common stock as compared to the April 30 proposal. Based upon Schlumberger’s revised proposal, upon completion of the merger, Cameron stockholders would own approximately 6% of the combined company. On August 4, 2015, the WTI spot price of oil as quoted on the NYMEX was $45.74 per barrel.

In an email exchange on August 5, 2015, Mr. Kibsgaard informed Mr. Moore that Schlumberger’s proposal set forth in its August 4 letter would expire at 8:00 p.m. Central time on August 13, 2015.

At meetings on August 12 and 13, 2015, the Cameron board of directors, with the assistance of members of Cameron management and representatives of Credit Suisse and Cravath, reviewed Schlumberger’s August 4 proposal and developments in Cameron’s business and the oil and gas industry, including that since May 6, 2015, the WTI price of oil had declined by approximately 29% and the PHLX Oil Services Sector Index had declined by approximately 18%, in each case as of August 11, 2015. Mr. Sledge reviewed with the Cameron board of directors an updated set of five-year projections prepared by Cameron’s management based on the Company Forecasts—May, modified to reflect then recent developments in the oil and gas industry, including the decline in oil prices and the expected resulting decline in capital spending by oil and gas production companies (which are referred to in this proxy statement/prospectus as the Company Forecasts—August (see the section entitled “The Merger—Financial Forecasts”)). On August 12, 2015, the WTI spot price of oil as quoted on the NYMEX was $43.30 per barrel.

Following discussion, the Cameron board of directors concluded that, in light of Cameron’s prospects at the time and the trading multiples of each company’s shares relative to their historical levels, the financial terms proposed by Schlumberger were not acceptable. The Cameron board of directors instructed Mr. Moore to accept Schlumberger’s request to meet in person on August 14, 2015 and to communicate to Schlumberger that Schlumberger would need to increase the value of its proposal in order for the Cameron board of directors to be willing to consider proceeding with the proposed transaction.

On August 14, 2015, representatives of Cameron management and Schlumberger management met to discuss the potential business combination. In the course of these discussions, Mr. Sledge communicated that the Cameron board of directors believed that Schlumberger was undervaluing Cameron and that as a result, the consideration being offered by Schlumberger was not sufficient. Later that day and following the meeting,

 

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Mr. Kibsgaard sent a letter to Mr. Moore in which Schlumberger set forth a revised offer whereby the consideration to be paid by Schlumberger would be a premium of approximately 40% to the volume weighted average price of Cameron’s common stock for the 20 trading day period ended August 21, 2015, with an increase in the stock component of the consideration from 50% to 80%.

On August 15, 2015, the Cameron board of directors, with the assistance of members of Cameron management and representatives of Credit Suisse and Cravath, met to review Schlumberger’s revised proposal. Mr. Moore provided the Cameron board of directors with an update on the discussions that had taken place the previous day between representatives of Cameron management and Schlumberger management. Following discussion, the Cameron board of directors decided to reject Schlumberger’s proposal, and Mr. Moore sent Mr. Kibsgaard a letter to that effect.

On August 17, 2015, Mr. Kibsgaard sent a letter to Mr. Moore in which Schlumberger reiterated its rationale for the proposed transaction. In the letter Schlumberger acknowledged that Cameron had rejected its proposal but indicated that Schlumberger was still open to further discussions.

On August 18, 2015, following consultation with other members of Cameron management and members of the Cameron board of directors, Mr. Moore contacted Mr. Kibsgaard to request a meeting. Mr. Moore and Mr. Kibsgaard met later that day. Mr. Moore indicated that if Schlumberger were to make a proposal at a valuation above $72.00 per share of Cameron common stock, subject to discussing any such proposal with the Cameron board of directors, he expected that Cameron and Schlumberger should be able to come to an agreement on valuation. After discussion, they agreed that Mr. Sledge should meet with Mr. Ayat to discuss valuation.

On August 19, 2015, Mr. Sledge and Mr. Ayat met to discuss valuation. Following that meeting, Schlumberger communicated a revised proposal of $72.20 per share of Cameron common stock, comprised of 20% cash and 80% shares of Schlumberger. Schlumberger’s revised proposal represented a premium of approximately 52% to the close of Cameron common stock on August 19, 2015. Based on the $80.67 closing price of Schlumberger common stock on August 19, 2015, the proposal implied an exchange ratio of approximately 0.716 shares of Schlumberger common stock plus $14.44 in cash per share of Cameron common stock as of August 19, 2015. Based upon Schlumberger’s revised proposal, upon completion of the merger, Cameron stockholders would own approximately 10% of the combined company. On August 19, 2015, the WTI spot price of oil as quoted on the NYMEX was $40.80 per barrel.

The Cameron board of directors met again on August 19, 2015 and, with the assistance of members of Cameron management and representatives of Credit Suisse and Cravath, reviewed the revised Schlumberger proposal. Mr. Moore provided the Cameron board of directors with an update of discussions between Cameron and Schlumberger. Following the Cameron board of directors’ discussion of Schlumberger’s revised proposal, the Cameron board of directors authorized Cameron management to indicate to Schlumberger that Cameron would be willing to proceed with the proposed transaction, and authorized management and Cameron’s legal and financial advisors to proceed with finalizing the terms of the transaction, with the objective of announcing the transaction on the morning of Monday, August 24, 2015. Later that evening, Baker Botts L.L.P., which is referred to as Baker Botts in this proxy statement/prospectus, Schlumberger’s legal advisor, delivered a draft merger agreement to Cravath. Over the next few days, Cravath, Baker Botts and members of Cameron’s and Schlumberger’s respective management teams negotiated the terms of the merger agreement, while Schlumberger, Cameron, and their respective advisors continued their due diligence efforts.

On August 20, 2015, the U.S. stock markets began to experience a severe decline, causing significant changes in the trading prices of both Cameron and Schlumberger common stock.

On August 21, 2015, Mr. Sledge met with Mr. Ayat. At that meeting, Mr. Ayat indicated to Mr. Sledge that, as a result of recent market volatility Schlumberger had determined that it was not willing to proceed on the

 

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previously discussed timetable. Mr. Sledge suggested to Mr. Ayat that, in order to be able to announce the transaction on the morning of Monday, August 24, 2015, Cameron and Schlumberger consider, in light of the stock market fluctuations which had affected the trading prices of Cameron common stock and Schlumberger common stock, the cash portion of the consideration payable per Cameron common share in the transaction be fixed at $14.44 in cash and the stock portion of the consideration payable per share of Cameron common stock in the transaction be fixed at the exchange ratio implied by Schlumberger’s August 19 proposal (which proposal was the basis on which Cameron had agreed to proceed with the proposed transaction) based on the market prices of Cameron common stock and Schlumberger common stock at the time of that proposal, which was 0.716 shares of Schlumberger common stock per share of Cameron common stock. The Cameron board of directors met later that day, along with members of Cameron management and representatives of Credit Suisse and Cravath, to receive an update as to the status of the transaction and market developments.

The Cameron board of directors met again on August 23, 2015, along with members of Cameron management and representatives of Credit Suisse and Cravath, to receive an update on the ongoing negotiations. At this meeting, representatives of Cravath presented the material terms of the merger agreement being negotiated. The Cameron board of directors instructed Cameron management and its advisors to continue negotiating to finalize the terms of the merger agreement. Cameron and Schlumberger continued their due diligence efforts, while Cameron management and Schlumberger management, along with Cravath and Baker Botts, continued to finalize the terms of the merger agreement.

On August 24, 2015, Mr. Ayat proposed to Mr. Sledge that Cameron and Schlumberger proceed with the transaction on the terms suggested at their August 21st meeting. Mr. Ayat also stated that Schlumberger wanted to finalize the terms of the merger agreement and announce the transaction on the morning of Wednesday, August 26, 2015. Mr. Sledge attempted to negotiate with Mr. Ayat; however, Mr. Ayat responded that this was Schlumberger’s best and final offer. Mr. Sledge informed Mr. Ayat that he would discuss this proposal with the Cameron board of directors.

Later in the evening on August 24, 2015, the Cameron board of directors met to discuss the status of discussions with Schlumberger. Members of Cameron management and representatives of Credit Suisse and Cravath were also in attendance at the request of the Cameron board of directors. Mr. Moore provided an update to the Cameron board of directors on discussions with Schlumberger, including the discussions between Mr. Ayat and Mr. Sledge prior to the Cameron board of directors meeting. Mr. Moore also indicated to the Cameron board of directors that due to recent developments affecting the oil and gas industry, including the increased volatility and uncertainty regarding future oil and gas prices, he had concerns that the Company Forecasts—August would be more difficult to achieve than Cameron management believed at the time the Company Forecasts—August were prepared. The Cameron board of directors discussed the revised Schlumberger proposal, including the financial aspects of the proposal. Credit Suisse reviewed with the Cameron board of directors financial information regarding Cameron and Schlumberger and financial aspects of the proposed transaction. Cravath updated the Cameron board of directors on the negotiation of the terms of the merger agreement and discussed the key open issues with the members of the Cameron board of directors. After discussion, the Cameron board of directors determined to proceed with the proposed transaction based on the Schlumberger proposal and instructed management and its advisors to continue to finalize the terms of the merger agreement.

Over August 24–25, 2015, representatives of Cameron and Schlumberger and Cravath and Baker Botts continued to finalize the remaining open items in the merger agreement.

On August 25, 2015, the Cameron board of directors met, along with members of Cameron management and representatives of Credit Suisse and Cravath, to consider the terms of the proposed transaction. Based upon the consideration set forth in the merger agreement, upon completion of the merger, Cameron stockholders would own approximately 10% of the combined company. The implied consideration as set forth in the merger agreement represented a premium of approximately 56% to the close of Cameron common stock on August 25, 2015. On August 25, 2015, the WTI spot price of oil as quoted on the NYMEX was $39.31 per barrel.

 

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Cravath again reviewed with the Cameron board of directors its fiduciary duties. Cravath then reviewed the terms of the proposed merger agreement that had not been finalized at the August 24, 2015 meeting of the Cameron board of directors, including the provisions relating to the allocation of regulatory risks.

As a result of the concerns expressed by Mr. Moore regarding Cameron’s ability to achieve the Company Forecasts—August, in advance of the August 25 board of directors meeting, Cameron’s management performed a sensitivity analysis on the Company Forecasts—August to reflect Cameron management’s views with respect to the potential adverse financial implications of developments affecting the oil and gas industry at that time, including the increased volatility and uncertainty regarding future oil and gas prices (see the section entitled “The Merger—Financial Forecasts”). This analysis was reviewed with the Cameron board of directors at the August 25 board of directors meeting.

Credit Suisse then reviewed and discussed its financial analyses with respect to Cameron and the proposed merger. Thereafter, at the request of the Cameron board of directors, Credit Suisse rendered its oral opinion to the Cameron board of directors (which was subsequently confirmed in writing by delivery of Credit Suisse’s written opinion dated the same date) to the effect that, as of August 25, 2015, the merger consideration to be received by the holders of Cameron common stock in the merger pursuant to the merger agreement was fair, from a financial point of view, to such holders.

Following discussion, the Cameron board of directors then determined, by unanimous vote, for the reasons detailed in “—Recommendation of the Cameron Board; Cameron’s Reasons for the Merger,” that the proposed merger agreement, the proposed merger, and the other agreements and transactions contemplated by the proposed merger agreement are fair to and in the best interests of Cameron and its stockholders, and approved and declared advisable the proposed merger agreement and the transactions contemplated by the proposed merger agreement, including the proposed merger.

On August 24, 2015, the Schlumberger board of directors convened a special telephonic meeting to discuss the status of discussions with Cameron and consider the terms of the proposed transaction. Mr. Ayat reviewed with the Schlumberger board of directors the financial terms of the transaction. In various email exchanges on August 25, 2015, the Schlumberger board of directors and Mr. Kibsgaard further discussed the financial parameters of the proposed transaction. Following these exchanges, the Schlumberger board of directors unanimously approved the proposed merger agreement, the proposed merger and the other agreements and transactions contemplated by the proposed merger agreement, and instructed Schlumberger management to proceed with the transaction.

Later in the day on August 25, 2015, the merger agreement was executed by Cameron, Schlumberger US, Merger Sub and Schlumberger. Early in the day on August 26, 2015, Cameron and Schlumberger issued a joint press release announcing the merger agreement.

Cameron’s Reasons for the Merger; Recommendation of the Cameron Board of Directors

The Cameron board of directors, at a meeting held on August 25, 2015, unanimously:

 

    approved and declared advisable the merger agreement, the merger and all of the other transactions contemplated by the merger agreement;

 

    declared that it is in the best interests of Cameron and its stockholders to enter into the merger agreement and consummate the merger and all of the other transactions contemplated by the merger agreement;

 

    directed that adoption of the merger agreement be submitted to a vote at a meeting of the Cameron stockholders; and

 

    recommended that the Cameron stockholders vote to adopt the merger agreement.

 

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Accordingly, the Cameron board of directors unanimously recommends a vote “FOR” the proposal to adopt the merger agreement and a vote “FOR” all other proposals.

In evaluating the proposed merger, the Cameron board of directors consulted with and received the advice of Cameron’s outside legal and financial advisors, held discussions with Cameron’s management and considered a number of factors that it believed supported its decision to enter into the merger agreement. These factors included, but were not limited to, the following:

 

    the per share merger consideration of $14.44 in cash and 0.716 Schlumberger shares valued at $72.52 per share of Cameron common stock as of August 25, 2015, representing a 56.3% premium to Cameron’s closing stock price of $42.47 on August 25, 2015 and a 37.0% premium over the 20-day volume weighted average price of Cameron stock as of August 25, 2015;

 

    the per share merger consideration representing a valuation of Cameron at a multiple of approximately 10.2 times Cameron’s forecasted EBITDA for fiscal year 2016;

 

    the Cameron board of directors’ understanding of the business operations, financial conditions, earnings and prospects of Cameron, including the prospects of Cameron on a standalone basis, including the Cameron board of directors’ views of market competition and the challenges and opportunities facing the oil and gas industry (including recent volatility in oil prices and potentially decreased demand for oil and natural gas due to weakening global economic growth) and the risks that Cameron would face given those challenges if it continued to operate on a standalone basis;

 

    the financial analyses reviewed and discussed with the Cameron board of directors by representatives of Credit Suisse as well as the oral opinion of Credit Suisse rendered to the Cameron board of directors on August 25, 2015 (which was subsequently confirmed in writing by delivery of Credit Suisse’s written opinion dated the same date) to the effect that, as of August 25, 2015, the merger consideration to be received by the holders of Cameron common stock in the merger pursuant to the merger agreement was fair, from a financial point of view, to such holders;

 

    the fact that the per share merger consideration to be paid to Cameron stockholders consisted of a high Schlumberger common stock component and that Cameron stockholders immediately prior to the merger would own approximately 10% of the equity interests of Schlumberger immediately following the completion of the merger, which would give former Cameron stockholders the opportunity to participate in future earnings and growth of Schlumberger and future appreciation in the value of Schlumberger’s common stock following the merger should they determine to retain the Schlumberger common stock they would receive in the merger;

 

    the Cameron board of directors’ review of Schlumberger’s business operations, financial condition, earnings and prospects;

 

    the financial profile of a combined Cameron and Schlumberger relative to that of Cameron as a standalone company, with a more diversified revenue base, both with respect to product/service offerings and geography, and a greater free cash flow as well as the synergies anticipated to be achievable in connection with the merger and the anticipated market capitalization, liquidity and capital structure of the combined company;

 

    the fact that the cash portion of the per share merger consideration to be paid to Cameron stockholders provided certainty of value, and that the market for Schlumberger common stock would allow Cameron stockholders the choice to either retain or dispose of the stock portion of the per share merger consideration;

 

    the fact that the exchange ratio included in the merger agreement provides for a fixed number of shares of Schlumberger common stock which offers Cameron stockholders the opportunity to benefit from any increase in the trading price of Schlumberger common stock before the closing of the merger;

 

    the likelihood that the proposed merger would be consummated based on, among other things:

 

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    the absence of a financing condition in the merger agreement;

 

    the likelihood and anticipated timing of consummating the merger in light of the scope of the conditions to closing;

 

    the level of the commitments by the parties to obtain applicable regulatory approvals, which in the view of the Cameron board of directors after considering the advice of counsel, made it highly likely that the merger once announced would be completed; and

 

    that Cameron is entitled to enforce specifically the terms of the merger agreement;

 

    other terms of the merger agreement, including:

 

    Cameron’s ability, at any time prior to obtaining the Cameron stockholder approval and under certain circumstances, to consider and respond to an unsolicited acquisition proposal, to furnish non-public information to the person making such a proposal and to engage in discussions or negotiations with the person making such a proposal;

 

    the Cameron board of directors’ ability, under certain circumstances, to withhold, withdraw, modify or qualify the Cameron board of directors’ recommendation to Cameron stockholders that they vote in favor of the adoption of the merger agreement or to approve, endorse or recommend an acquisition proposal;

 

    Cameron’s ability, under certain circumstances, to terminate the merger agreement in order to enter into any agreement, understanding or arrangement providing for a superior proposal, provided that Cameron concurrently with such termination pays to Schlumberger US a termination fee of $321 million; and

 

    the availability of appraisal rights under the DGCL to Cameron stockholders who comply with all of the required procedures under the DGCL, which allows such holders to seek appraisal of the fair value of their shares of Cameron common stock as determined by the Delaware Court of Chancery;

 

    whether there were other potential parties that might have an interest in, and be financially capable of, engaging in a strategic transaction with Cameron at a value higher than Schlumberger’s proposal;

 

    the fact that merger is not subject to approval by Schlumberger stockholders; and

 

    the risk that pursuing other potential alternatives, including continuing to operate on a standalone basis, could have resulted in the loss of an opportunity to consummate a transaction with Schlumberger.

In the course of its deliberations, the Cameron board of directors also considered a variety of risks and other countervailing factors related to entering into the merger agreement, the merger and the other transaction contemplated thereby, including but not limited to:

 

    the possibility that the merger may be delayed or not occur at all, due to a failure of certain conditions;

 

    the risk that regulatory agencies may not approve the merger or may impose terms and conditions on their approvals that would either materially impair the business operations of the combined company or adversely impact the ability of the combined company to realize the synergies that are expected to occur in connection with the merger;

 

    the risks and costs to Cameron if the merger is delayed or does not occur at all, including the potential negative impact on Cameron’s ability to retain key employees, the diversion of Cameron management and employee attention and the potential disruptive effects on Cameron’s day-to-day operations and Cameron’s relationships with third parties, including its customers and suppliers;

 

   

the restrictions on the conduct of Cameron’s business prior to the consummation of the merger, which may delay or prevent Cameron from undertaking business opportunities that may arise or other actions

 

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it would otherwise take with respect to the operations of Cameron pending consummation of the merger;

 

    the challenges inherent in the combination of two businesses of the size and complexity of Cameron and Schlumberger, including potential risks associated with achieving anticipated synergies and successfully integrating Cameron’s business, operations and workforce with those of Schlumberger;

 

    the fact that the exchange ratio included in the merger agreement provides for a fixed number of shares of Schlumberger common stock, meaning Cameron stockholders cannot be sure at the time they vote on the merger of the market value of the merger consideration they will receive, and the possibility that Cameron stockholders could be adversely affected by a decrease in the market price of Schlumberger common stock before the closing of the merger;

 

    the risk of incurring substantial expenses related to the merger, including in connection with any litigation resulting from the announcement or pendency of the merger;

 

    the possibility that the expense reimbursement that Schlumberger US would be required to pay under the merger agreement upon termination of the merger agreement under certain circumstances would be insufficient to compensate Cameron for its costs incurred in connection with the merger agreement;

 

    the provisions of the merger agreement that restrict Cameron’s ability to solicit or participate in discussions or negotiations regarding alternative acquisition proposals, subject to specified exceptions, and that require Cameron to give Schlumberger the opportunity to propose revisions to the terms of the transactions contemplated by the merger agreement prior to Cameron being able to terminate the merger agreement to accept a superior proposal;

 

    the possibility that, if the merger is not consummated, under certain circumstances, Cameron may be required to reimburse Schlumberger and Schlumberger US for up to $10 million of their expenses or pay to Schlumberger US a termination fee of $321 million, as more fully described in the section entitled “The Merger Agreement—Termination, Amendment and Waiver,” which could discourage other third parties from making an alternative acquisition proposal with respect to Cameron, but which the Cameron board of directors believed would not be a meaningful deterrent;

 

    the fact that Cameron negotiated solely with Schlumberger rather than conducting a public or private “auction” or sales process of Cameron; and

 

    the fact that the transaction, including the stock portion of the per share merger consideration, would be taxable to Cameron’s stockholders that are U.S. holders for U.S. federal income tax purposes.

In addition, the Cameron board of directors was aware of and considered the interests of its directors and executive officers that are different from, or in addition to, the interests of Cameron stockholders generally, including the treatment of Cameron stock options and other equity awards held by such directors and executive officers in the merger described in the section entitled “The Merger—Interests of Cameron’s Directors and Executive Officers in the Merger” and Schlumberger’s agreement to indemnify Cameron directors and officers against certain claims and liabilities.

The foregoing discussion of the information and factors that the Cameron board of directors considered is not intended to be exhaustive, but rather is meant to include the material factors that the Cameron board of directors considered. The Cameron board of directors collectively reached the conclusion to approve the merger agreement, the merger and all of the other transactions contemplated by the merger agreement in light of the various factors described above and other factors that the members of the Cameron board of directors believed were appropriate. In view of the complexity and wide variety of factors, both positive and negative, that the Cameron board of directors considered in connection with its evaluation of the merger, the Cameron board of directors did not find it practical, and did not attempt, to quantify, rank or otherwise assign relative or specific weights or values to any of the factors it considered in reaching its decision and did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or

 

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unfavorable to the ultimate determination of the Cameron board of directors. Rather, in considering the various factors, individual members of the Cameron board of directors considered all of these factors as a whole and concluded, based on the totality of information presented to them and the investigation conducted by them, that, on balance, the positive factors outweighed the negative factors and that they supported a determination to approve the merger agreement, declare its advisability and recommend that the Cameron stockholders vote to adopt the merger agreement. In considering the factors discussed above, individual directors may have given different weights to different factors and the factors are not presented in any order of priority.

Schlumberger’s Reasons for the Merger

Schlumberger believes the merger will create sustainable long-term value for its stockholders. Key factors considered by Schlumberger include the following:

 

    Schlumberger’s belief that combining its deep reservoir knowledge with Cameron’s wellhead and surface technology, further enabled by instrumentation, software and automation, will launch a new era of complete drilling and production system performance;

 

    Schlumberger’s expectation that the transaction will combine two complementary technology portfolios into a “pore-to-pipeline” products and services offering to the global oil and gas industry, which, on a pro forma basis, would have had 2014 revenues of $59 billion;

 

    Schlumberger’s expectation that the merger will result in incremental pretax synergies of approximately $300 million and $600 million in the first year and the second year after closing, respectively, with a growing component of revenue synergies expected in the second year and beyond;

 

    Schlumberger’s expectation that the transaction will result in the achievement of significant efficiency gains through lower operating costs, streamlined supply chains, and improved manufacturing processes while leveraging the Schlumberger transformation platform;

 

    Schlumberger’s expectation that the merger will be accretive to earnings per share by the end of the first year after closing; and

 

    Schlumberger’s belief that the next industry technical breakthrough will be achieved through integration of Schlumberger’s reservoir and well technologies with Cameron’s leadership in surface, drilling, processing and flow control technologies, generating value for customers through expanded technical capabilities, improved efficiency and closer commercial alignment to lower cost per barrel and raise recovery.

Opinion of Cameron’s Financial Advisor

On August 25, 2015, Credit Suisse rendered its oral opinion to the Cameron board of directors (which was subsequently confirmed in writing by delivery of Credit Suisse’s written opinion dated the same date) to the effect that, as of August 25, 2015, the merger consideration to be received by the holders of Cameron common stock in the merger pursuant to the merger agreement was fair, from a financial point of view, to such holders.

Credit Suisse’s opinion was directed to the Cameron board of directors, and only addressed, as of August 25, 2015, the fairness, from a financial point of view, to the holders of Cameron common stock of the merger consideration to be received by such holders in the merger pursuant to the merger agreement and did not address any other aspect or implication of the merger. The summary of Credit Suisse’s opinion in this proxy statement/prospectus is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex C to this proxy statement/prospectus and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Credit Suisse in preparing its opinion. However, neither Credit Suisse’s written opinion nor the summary of its opinion and the related analyses set forth in this proxy statement/prospectus is intended to be, and they do not constitute, advice or a recommendation to any stockholder as to how such holder should vote or act on any matter relating to the proposed merger.

 

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In arriving at its opinion, Credit Suisse:

 

    reviewed the merger agreement;

 

    reviewed certain publicly available business and financial information relating to Cameron and Schlumberger;

 

    reviewed certain other information relating to Cameron and Schlumberger, including the Company Forecasts—August and certain publicly available research analyst estimates with respect to future financial performance of Schlumberger (the “Schlumberger Street Estimates”);

 

    received guidance from management of Cameron regarding the potential adverse financial implications of recent developments affecting the oil and gas industry, including the increased volatility and uncertainty regarding future oil and gas prices;

 

    spoke with the managements of Cameron and Schlumberger regarding the business prospects of Cameron and Schlumberger, respectively;

 

    considered certain financial and stock market data of Cameron and Schlumberger, and compared that data with similar data for other companies with publicly traded equity securities in businesses Credit Suisse deemed similar to those of Cameron and Schlumberger, respectively;

 

    considered, to the extent publicly available, the financial terms of certain other business combinations and other transactions which had been effected or announced; and

 

    considered such other information, financial studies, analyses and investigations and financial, economic and market criteria which Credit Suisse deemed relevant.

In connection with its review Credit Suisse did not independently verify any of the foregoing information, and Credit Suisse assumed and relied upon such information being complete and accurate in all respects. Credit Suisse was advised by Cameron management that recent developments affecting the oil and gas industry, including the increased volatility and uncertainty regarding future oil and gas prices, had raised concerns that the Company Forecasts—August would be more difficult to achieve than Cameron management believed at the time the Company Forecasts—August were prepared. Nevertheless, although such developments and the resulting uncertainty made Cameron’s future financial performance difficult to predict, management of Cameron advised Credit Suisse and Credit Suisse assumed that the Company Forecasts—August continued to reflect the best currently available estimates and judgments of the management of Cameron as to the future financial performance of Cameron. With respect to the Schlumberger Street Estimates that Credit Suisse used and relied upon for purposes of its analyses and opinion, management of Schlumberger advised Credit Suisse and Credit Suisse assumed that such Schlumberger Street Estimates were reasonable estimates as to the future financial performance of Schlumberger. At the direction of management of Cameron, Credit Suisse assumed that the Company Forecasts—August and the Schlumberger Street Estimates were a reasonable basis on which to evaluate Cameron, Schlumberger and the merger and Credit Suisse used and relied upon such forecasts and estimates for purposes of its analyses and opinion. Credit Suisse expressed no view or opinion with respect to the Company Forecasts—August or the Schlumberger Street Estimates or the assumptions upon which they were based.

Credit Suisse also assumed, with Cameron’s consent, that, in the course of obtaining any regulatory or third party consents, approvals or agreements in connection with the merger, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on Cameron, Schlumberger or the contemplated benefits of the merger. With Cameron’s consent, Credit Suisse also assumed that the merger would be consummated in compliance with all applicable laws and regulations and in accordance with the terms of the merger agreement, without waiver, modification or amendment of any term, condition or agreement thereof that was material to Credit Suisse’s analyses or opinion. Credit Suisse did not investigate or otherwise evaluate, and its opinion did not address, the potential effects of the merger on the federal, state or other taxes or tax rates payable by Cameron, Schlumberger or their respective security holders and, with Cameron’s consent, Credit

 

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Suisse assumed, that Cameron and Schlumberger would not incur any gain or loss as a result of the merger and that, except as would not be material to its analyses or opinion, such taxes and tax rates would not be adversely affected by or after giving effect to the merger. In addition, Credit Suisse was not requested to make, and did not make, an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Cameron or Schlumberger, nor was Credit Suisse furnished with any such evaluations or appraisals.

Credit Suisse’s opinion addressed only the fairness, from a financial point of view, to the holders of Cameron common stock of the merger consideration to be received by such holders in the merger pursuant to the merger agreement and did not address any other aspect or implication (financial or otherwise) of the merger or any agreement, arrangement or understanding entered into in connection therewith or otherwise, including, without limitation, the form and structure of the merger and the merger consideration or the fairness of the amount or nature of, or any other aspect relating to, any compensation or consideration to be received by or otherwise payable to any officers, directors, employees, security holders or affiliates of any party to the merger, or class of such persons, relative to the merger consideration or otherwise. Furthermore, Credit Suisse did not express any advice or opinion regarding matters that require legal, regulatory, accounting, insurance, tax, environmental, executive compensation or other similar professional advice. Credit Suisse assumed that Cameron had obtained or would obtain such advice or opinions from the appropriate professional sources. The issuance of Credit Suisse’s opinion was approved by Credit Suisse’s authorized internal committee.

Credit Suisse’s opinion was necessarily based upon information made available to Credit Suisse as of the date of its opinion and financial, economic, market and other conditions as they existed and could be evaluated on the date of its opinion. Credit Suisse did not undertake, and is under no obligation, to update, revise, reaffirm or withdraw its opinion, or otherwise comment on or consider events occurring or coming to its attention after the date of its opinion. In addition, as the Cameron board of directors was aware, the financial projections and estimates that Credit Suisse reviewed relating to the future financial performance of Cameron and Schlumberger reflected certain assumptions regarding the oil and gas industry and the future commodity prices associated with the oil and gas industry that were subject to significant uncertainty and volatility and that, if different than assumed, could have a material impact on its analyses and opinion. Credit Suisse’s opinion did not address the relative merits of the merger as compared to alternative transactions or strategies that might have been available to Cameron, nor did it address the underlying business decision of the Cameron board of directors or Cameron to proceed with or effect the merger. Credit Suisse did not express any opinion as to what the value of shares of Schlumberger common stock actually would be when issued pursuant to the merger or the price or range of prices at which shares of Schlumberger common stock or Cameron common stock may be purchased or sold at any time. Credit Suisse was not requested to, and did not, solicit third party indications of interest in acquiring all or any part of Cameron.

Credit Suisse’s opinion was for the information of the Cameron board of directors in connection with its consideration of the merger and did not constitute a recommendation to the Cameron board of directors with respect to the merger or advice or a recommendation to any holder of Cameron common stock as to how such holder should vote or act on any matter relating to the proposed merger.

In preparing its opinion to the Cameron board of directors, Credit Suisse performed a variety of analyses, including those described below. The summary of Credit Suisse’s financial analyses is not a complete description of the analyses underlying Credit Suisse’s opinion. The preparation of such an opinion is a complex process involving various quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytic methods employed and the adaptation and application of those methods to the unique facts and circumstances presented. As a consequence, neither Credit Suisse’s opinion nor the analyses underlying its opinion are readily susceptible to partial analysis or summary description. Credit Suisse arrived at its opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any individual analysis, analytic method or factor. Accordingly, Credit Suisse believes that its analyses must be considered as a whole and that selecting portions of its analyses, analytic methods and factors, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying its analyses and opinion.

 

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In performing its analyses, Credit Suisse considered business, economic, industry and market conditions, financial and otherwise, and other matters as they existed on, and could be evaluated as of, the date of its opinion. No company, business or transaction used in Credit Suisse’s analyses for comparative purposes is identical to Cameron or the proposed merger. While the results of each analysis were taken into account in reaching its overall conclusion with respect to fairness, Credit Suisse did not make separate or quantifiable judgments regarding individual analyses. The implied valuation reference ranges indicated by Credit Suisse’s analyses are illustrative and not necessarily indicative of actual values nor predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold, which may depend on a variety of factors, many of which are beyond Cameron’s control and the control of Credit Suisse. Much of the information used in, and accordingly the results of, Credit Suisse’s analyses are inherently subject to substantial uncertainty.

Credit Suisse’s opinion and analyses were provided to the Cameron board of directors (in its capacity as such) in connection with its consideration of the proposed merger and were among many factors considered by the Cameron board of directors in evaluating the proposed merger. Neither Credit Suisse’s opinion nor its analyses were determinative of the merger consideration or of the views of the Cameron board of directors with respect to the proposed merger.

The following is a summary of the material financial analyses performed in connection with Credit Suisse’s opinion rendered to the Cameron board of directors on August 25, 2015. The analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the analyses. Considering the data in the tables below without considering the full narrative description of the analyses, as well as the methodologies underlying, and the assumptions, qualifications and limitations affecting, each analysis, could create a misleading or incomplete view of Credit Suisse’s analyses.

For purposes of its analyses, Credit Suisse reviewed a number of financial metrics including:

 

    Enterprise Value—generally the value as of a specified date of the relevant company’s outstanding equity securities (taking into account its options and other outstanding convertible securities) plus the value as of such date of its corporate adjustments (the value of its outstanding indebtedness, non-controlling interests, preferred stock and capital lease obligations less the amount of cash on its balance sheet).

 

    EBITDA—generally the amount of the relevant company’s earnings before interest, taxes, depreciation and amortization for a specified time period.

For purposes of its analyses and opinion, Credit Suisse calculated an implied value of the merger consideration of $66.36 per share of Cameron common stock, which was based on the merger consideration to be received per share of Cameron common stock of $14.44 in cash and 0.716 of a share of Schlumberger common stock, with a share of Schlumberger common stock valued based on the closing market price of a share of Schlumberger common stock of $72.52 on August 25, 2015, the last trading day prior to the execution of the merger agreement. Credit Suisse compared the implied value of the merger consideration to the valuation reference ranges implied by each of the financial analyses with respect to Cameron described below.

Selected Companies Analyses

Credit Suisse considered certain financial data for Cameron and selected companies with publicly traded equity securities Credit Suisse deemed relevant. The selected companies were selected because they were deemed to be similar to Cameron in one or more respects, including the nature of their business, size, diversification and financial performance. Unless the context indicates otherwise, share prices for the selected companies used in the selected companies analysis described below were as of August 25, 2015. The estimates of Cameron’s future financial performance for the calendar years ending December 31, 2015, 2016 and 2017 used

 

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in the selected companies analysis described below were based on the Company Forecasts—August. Estimates of the future financial performance of the selected companies listed below for the calendar years ending December 31, 2015, 2016 and 2017 were based on publicly available research analyst estimates for those companies.

The financial data reviewed included:

 

    Enterprise Value as a multiple of estimated EBITDA for the calendar year ended December 31, 2015, or “CY 2015E EBITDA”;

 

    Enterprise Value as a multiple of estimated EBITDA for the calendar year ended December 31, 2016, or “CY 2016E EBITDA”; and

 

    Enterprise Value as a multiple of estimated EBITDA for the calendar year ended December 31, 2017, or “CY 2017E EBITDA.”

The selected companies and corresponding multiples were:

 

     ENTERPRISE VALUE  
     CY 2015E
EBITDA
     CY 2016E
EBITDA
     CY 2017E
EBITDA
 

National Oilwell Varco, Inc.

     6.5x         7.7x         6.8x   

FMC Technologies, Inc.

     7.1x         8.0x         7.7x   

Flowserve Corporation

     8.7x         8.4x         7.7x   

Oceaneering International, Inc.

     6.4x         6.7x         6.2x   

Dril-Quip, Inc.

     6.5x         8.5x         8.2x   

Oil States International, Inc.

     7.0x         7.6x         5.5x   

Forum Energy Technologies, Inc.

     8.8x         8.4x         6.5x   

Aker Solutions ASA

     4.3x         4.6x         4.5x   

Circor International, Inc.

     9.4x         8.1x         7.4x   

Taking into account the results of the selected companies analysis, Credit Suisse applied multiple ranges of 7.0x to 8.0x to Cameron’s CY 2015E EBITDA, 7.0x to 8.0x to Cameron’s CY 2016E EBITDA and 6.5x to 7.5x to Cameron’s CY 2017E EBITDA. The selected companies analysis indicated an implied valuation reference range of $41.51 to $49.30 per share of Cameron common stock, as compared to the implied value of the merger consideration of $66.36 per share of Cameron common stock.

Discounted Cash Flow Analysis

Credit Suisse also performed a discounted cash flow analysis of Cameron by calculating the estimated net present value of the projected after-tax, unlevered free cash flow of Cameron based on the Company Forecasts—August. Credit Suisse applied a range of terminal value multiples of 7.5x to 9.0x to Cameron’s estimated FY 2019E EBITDA and discount rates ranging from 9.0% to 12.0%. The discounted cash flow analysis of Cameron based on the Company Forecasts—August indicated an implied valuation reference range of $59.90 to $76.79 per share of Cameron common stock, as compared to the implied value of the merger consideration of $66.36 per share of Cameron common stock. Credit Suisse also performed a sensitivity discounted cash flow analysis, applying the same range of terminal value multiples and discount rates, taking into account Cameron management’s views with respect to the potential adverse implications of recent developments affecting the oil and gas industry, including increased volatility and uncertainty regarding future oil and gas prices, on Cameron’s estimated future revenue and EBITDA. The sensitivity discounted cash flow analysis of Cameron based on the Company Forecasts—August and taking into account such views of Cameron management indicated an implied valuation reference range of $53.49 to $68.55 per share of Cameron common stock, as compared to the implied value of the merger consideration of $66.36 per share of Cameron common stock.

 

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Selected Transactions Analysis

Credit Suisse also considered the financial terms of certain business combinations and other transactions Credit Suisse deemed relevant. The selected transactions were selected because the target companies were oilfield services companies deemed to be similar to Cameron in one or more respects, including the nature of their business, size, diversification and financial performance. The financial data reviewed included the implied Enterprise Value (based on the consideration proposed to be paid in the selected transactions as of the date of announcement) as a multiple of EBITDA for the last twelve months prior to the announcement of the relevant transaction for which information was publicly available, or “LTM EBITDA.” The selected transactions and corresponding multiples were:

 

Date

    Announced    

    

Acquiror

  

Target

   Enterprise
Value /LTM
EBITDA
 
  Large Cap            
  11/2014       Halliburton Company    Baker Hughes Incorporated      8.7x   
  9/2014       Siemens AG    Dresser-Rand Group Inc.      18.3x   
  2/2010       Schlumberger Limited    Smith International      14.4x   
  8/2009       Baker Hughes Incorporated    BJ Services Company      6.6x   
  12/2007       National Oilwell Varco, Inc.    Grant Prideco, Inc.      10.6x   
  5/1998       Baker Hughes Incorporated    Western Atlas Inc.      9.9x   
  2/1998       Halliburton Company    Dresser Industries, Inc.      9.5x   
  Equipment            
  4/2013       General Electric Company    Lufkin Industries, Inc.      17.4x   
  8/2012       National Oilwell Varco, Inc.    Robbins & Myers, Inc.      9.4x   
  2/2011       General Electric Company    John Wood Group Plc’s well-support business      17.2x   
  12/2010       General Electric Company    Wellstream Holdings PLC      17.5x   
  10/2010       General Electric Company    Dresser Inc.      N/A*   
  2/2007       Tenaris SA    Hydril Company LP      13.6x   
  8/2004       National-Oilwell, Inc.    Varco International, Inc.      13.6x   
  6/1998       Schlumberger Limited    Camco International Inc.      14.0x   

 

* Insufficient information publicly available with respect to Dresser, Inc. to calculate this multiple.

Taking into account the results of the selected transactions analysis, Credit Suisse applied a multiple range of 8.0x to 10.0x to Cameron’s LTM EBITDA as of June 30, 2015. The selected transactions analysis indicated an implied valuation reference range of $60.30 to $77.68 per share of Cameron common stock, as compared to the implied value of the merger consideration of $66.36 per share of Cameron common stock.

Other Matters

Credit Suisse acted as financial advisor to Cameron in connection with the merger and will receive a transaction fee of $32 million for its services upon the consummation of the merger. Credit Suisse also became entitled to receive a fee of $5 million upon the rendering of its opinion which is creditable (to the extent paid) against the transaction fee. In addition, Cameron agreed to reimburse certain of Credit Suisse’s expenses and to indemnify Credit Suisse and certain related parties for certain liabilities and other items arising out of or related to Credit Suisse’s engagement.

Credit Suisse and its affiliates have in the past provided other financial advice and services to Cameron, Schlumberger and/or their respective affiliates for which Credit Suisse and its affiliates have received compensation including having acted as joint bookrunning lead managing underwriter of public offerings of debt securities by Cameron in December 2013 and June 2014 and having acted as financial advisor to Cameron in connection with the formation of the OneSubsea joint venture that closed in June 2013, for which services Credit

 

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Suisse and its affiliates received aggregate fees, discounts and commissions of approximately $12 million. Credit Suisse did not receive any investment banking fees from Schlumberger during the preceding four years. Credit Suisse is currently a lender to Cameron, and Credit Suisse and its affiliates may in the future provide other financial advice and services to Cameron, Schlumberger and/or their respective affiliates for which Credit Suisse and its affiliates would expect to receive compensation. Credit Suisse is a full service securities firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, Credit Suisse and its affiliates may acquire, hold or sell, for its and its affiliates’ own accounts and the accounts of customers, any currency or commodity that may be involved in the merger and equity, debt and other securities and financial instruments (including bank loans and other obligations) of Cameron, Schlumberger and any other company that may be involved in the merger, as well as provide investment banking and other financial services to such companies and their affiliates.

Financial Forecasts

Cameron does not, as a matter of course, publicly disclose forecasts as to future performance, earnings or other results due to the unpredictability of the underlying assumptions and estimates. However, Cameron has included below certain information that was furnished to Schlumberger, the Cameron board of directors and Cameron’s financial advisor in connection with discussions concerning the proposed merger.

The estimates of Cameron’s future financial performance set forth below entitled “Company Forecasts—May” were prepared in May 2015 by Cameron’s management for use by Cameron’s board of directors and Cameron’s financial advisor based on management’s reasonable best estimates and assumptions with respect to Cameron’s future financial performance at the time such estimates were prepared and speak only as of that time. Cameron’s management furnished the Company Forecasts—May to the Cameron board of directors and Cameron’s financial advisor. The estimates of Cameron’s future financial performance set forth below entitled “Transaction Forecasts” were prepared in June 2015 by Cameron’s management for use by Schlumberger in connection with the potential transaction based on the Company Forecasts—May, but modified to reflect more optimistic, but still realistic, assumptions regarding Cameron’s future results and market conditions in the oil and gas industry, including more optimistic assumptions regarding the pace of recovery in drilling activity levels and capital spending by oil and gas production companies. Cameron’s management furnished the Transaction Forecasts to Schlumberger in connection with Schlumberger’s evaluation of a potential transaction and the negotiations between Cameron and Schlumberger concerning the proposed merger. The estimates of Cameron’s future financial performance set forth below entitled “Company Forecasts—August” were prepared in August 2015 by Cameron’s management for use by Cameron’s board of directors and Cameron’s financial advisor based on the Company Forecasts—May, but updated to reflect recent developments in the oil and gas industry as of such date, including the decline in oil prices and the expected resulting decline in capital spending by oil and gas production companies. Cameron’s management furnished the Company Forecasts—August to the Cameron board of directors and Cameron’s financial advisor. Based on instructions from Cameron’s management, Credit Suisse relied on the Company Forecasts—August for its analysis for purposes of its opinion. These financial forecasts were not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial data, published guidelines of the SEC regarding forward-looking statements or GAAP. A summary of this information is presented below.

While the financial forecasts were prepared in good faith, no assurance can be made regarding future events. The estimates and assumptions underlying the financial forecasts involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among other things, the inherent uncertainty of the business and economic conditions affecting the industries in which Cameron and Schlumberger operate, and the risks and uncertainties described under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements,” all of which are difficult to predict and many of which are outside the control of Cameron and

 

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Schlumberger and will be beyond the control of the combined company. Holders of Cameron common stock are urged to review Cameron’s SEC filings for a description of risk factors with respect to Cameron’s business and Schlumberger’s SEC filings for a description of risk factors with respect to Schlumberger’s business, as well as, in each case, the section of this proxy statement/prospectus entitled “Risk Factors.” There can be no assurance that the underlying assumptions will prove to be accurate or that the projected results will be realized, and actual results likely will differ, and may differ materially, from those reflected in the financial forecasts, whether or not the merger is completed. The inclusion in this proxy statement/prospectus of the financial forecasts below should not be regarded as an indication that Cameron, Schlumberger, their respective boards of directors or Cameron’s financial advisor considered, or now considers, these forecasts to be a reliable predictor of future results. The financial forecasts are not fact and should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement/prospectus are cautioned not to place undue reliance on this information. The financial forecasts assume that Cameron would continue to operate as stand-alone company and do not reflect any impact of the proposed merger.

The financial forecasts include certain non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Cameron may not be comparable to similarly titled amounts used by other companies. The footnotes to the tables below provide certain supplemental information with respect to the calculation of these non-GAAP financial measures. All of the financial forecasts summarized in this section were prepared by the management of Cameron. Neither Ernst & Young LLP (Cameron’s independent registered public accounting firm) nor any other independent registered public accounting firm has examined, compiled or otherwise performed any procedures with respect to the prospective financial information contained in these financial forecasts and, accordingly, neither Ernst & Young LLP nor any other independent registered public accounting firm has expressed any opinion or given any other form of assurance with respect thereto and no independent registered public accounting firm assumes any responsibility for the prospective financial information. The Ernst & Young LLP reports either incorporated by reference or included in this proxy statement/prospectus relate to the historical financial information of Cameron. Such reports do not extend to the financial forecasts and should not be read to do so.

By including in this proxy statement/prospectus the financial forecasts below, none of Cameron, Schlumberger or any of their respective representatives has made or makes any representation to any person regarding the ultimate performance of Cameron compared to the information contained in the financial forecasts. Further, the inclusion of the financial forecasts in this proxy statement/prospectus does not constitute an admission or representation by Cameron or Schlumberger that this information is material. The financial forecasts summarized in this section reflected the estimates and judgments available to the management of Cameron at the time they were prepared and, except for the preparation of the Company Forecasts—August which were based on the Company Forecasts—May as described above, have not been updated to reflect any changes since the dates such financial forecasts were prepared. Neither Cameron, Schlumberger, nor, after completion of the merger, the combined company undertakes any obligation, except as required by law, to update or otherwise revise the financial forecasts to reflect circumstances existing since their preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error, or to reflect changes in general economic or industry conditions.

The summary of the financial forecasts is not included in this proxy statement/prospectus in order to induce any stockholder to vote in favor of the proposal to adopt the merger agreement or any of the other proposals to be voted on at the Cameron special meeting, but because the financial forecasts were made available to the Cameron board of directors, Cameron’s financial advisor and, with respect to the Transaction Forecasts, Schlumberger.

 

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Company Forecasts—May

The following table presents select financial forecasts for the fiscal years ending 2015 through 2019 prepared by Cameron’s management.

 

     Fiscal Year Ending December 31,  
     2015E      2016E      2017E      2018E      2019E  
     ($ in millions)  

Revenue

   $ 8,860       $ 8,339       $ 8,615       $ 9,441       $ 10,091   

EBITDA(1)

     1,420         1,448         1,730         1,966         2,157   

Capital Expenditures

     355         317         297         315         334   

Transaction Forecasts

The following table presents select financial forecasts for the fiscal years ending 2015 through 2019 prepared by Cameron’s management.

 

     Fiscal Year Ending December 31,  
     2015E      2016E      2017E      2018E      2019E  
     ($ in millions)  

Revenue

   $ 8,860       $ 9,073       $ 9,424       $ 10,888       $ 12,144   

EBITDA(1)

     1,420         1,675         1,964         2,352         2,674   

Capital Expenditures

     355         317         330         381         421   

Company Forecasts—August

The following table presents select financial forecasts for the fiscal years ending 2015 through 2019 prepared by Cameron’s management.

 

     Fiscal Year Ending December 31,  
     2015E      2016E      2017E      2018E      2019E  
     ($ in millions)  

Revenue

   $ 8,860       $ 8,339       $ 8,787       $ 9,733       $ 10,495   

EBITDA(1)

     1,420         1,448         1,747         1,953         2,113   

Capital Expenditures

     355         317         302         323         347   

The following table presents projected unlevered free cash flows for Cameron (defined as earnings before interest and taxes, less cash taxes, plus depreciation and amortization, less capital expenditures, less increase in working capital, and less 40% of OneSubsea’s cash flows) as arithmetically derived by Credit Suisse based on the Company Forecasts—August prepared and provided to Credit Suisse by Cameron’s management.

 

     Fiscal Year Ending December 31,  
     Second
Half
2015
     2016E      2017E      2018E      2019E  
     ($ in millions)  

Unlevered Free Cash Flow. . . . . . . . . . .

   $ 425       $ 1,249       $ 1,131       $ 1,191       $ 1,218   

Sensitivity Analysis of Company Forecasts—August

As described in “—Background of the Merger,” Cameron’s management performed a sensitivity analysis on the Company Forecasts—August to reflect Cameron management’s views with respect to the potential adverse financial implications of developments affecting the oil and gas industry at the time the parties entered into the merger agreement, including the increased volatility and uncertainty regarding future oil and gas prices. These

 

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sensitized amounts were provided to the Cameron board of directors and Cameron’s financial advisor. These sensitized amounts are set forth below:

 

     Fiscal Year Ending December 31,  
     2015E      2016E      2017E      2018E      2019E  
     ($ in billions)  

Revenue

   $ 8.9       $ 7.9       $ 8.2       $ 8.9       $ 9.5   

EBITDA(1)

     1.4         1.3         1.5         1.7         1.9   

 

(1) Earnings before interest, taxes, depreciation and amortization expense and other costs (“EBITDA”) is a non-GAAP financial measure and should not be considered as an alternative to operating income or net income as a measure of operating performance or cash flows or as a measure of liquidity. EBITDA does not include the impact of any (i) synergies or (ii) costs related to the merger.

The following table presents projected unlevered free cash flows for Cameron (defined as earnings before interest and taxes, less cash taxes, plus depreciation and amortization, less capital expenditures, less increase in working capital, and less 40% of OneSubsea’s cash flows) as arithmetically derived by Credit Suisse based on the Sensitivity Analysis of Company Forecasts—August prepared and provided to Credit Suisse by Cameron’s management.

 

     Fiscal Year Ending December 31,  
     Second
Half
2015
     2016E      2017E      2018E      2019E  
     ($ in millions)  

Unlevered Free Cash Flow

   $ 425       $ 1,159       $ 1,026       $ 1,065       $ 1,130   

Interests of Cameron’s Directors and Executive Officers in the Merger

Non-Employee Directors

The general treatment of Cameron equity awards is described under the section entitled “The Merger Agreement—Treatment of Equity Awards” below. The table below sets forth the estimated values of the unvested deferred stock units held by non-employee directors, which are subject to “single-trigger” accelerated vesting at the effective time. The values were calculated by assuming that the effective time occurred on November 1, 2015, which is the assumed date of the effectiveness of the merger, solely for purposes of this disclosure, and that the price per share of Cameron common stock was $65.10, which equals the average closing price per share of Cameron common stock over the five business day period following the first public announcement of the merger on August 26, 2015 and is the assumed price solely for purposes of this disclosure.

 

Director

   Deferred Stock Unit
Acceleration ($)
 

H. Paulett Eberhart

     228,566   

Peter J. Fluor

     228,566   

Douglas L. Foshee

     228,566   

James T. Hackett(1)

     —     

Rodolfo Landim

     228,566   

Jack B. Moore(2)

     170,106   

Michael E. Patrick

     228,566   

Timothy J. Probert

     228,566   

Jon Erik Reinhardsen

     228,566   

Brent J. Smolik

     228,566   

Bruce W. Wilkinson

     228,566   

 

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(1) Mr. Hackett is currently serving as an Advisory Director while pursuing a theology degree at Harvard Divinity School. As a result, Mr. Hackett did not receive an award of deferred stock units in 2015.
(2) Mr. Moore became the non-executive Chairman of the Board on October 5, 2015 and received a prorated award of deferred stock units for 2015.

Executive Officers

Cameron’s current or former executive officers for purposes of the discussion below are: R. Scott Rowe, President and Chief Executive Officer; Charles M. Sledge, Senior Vice President and Chief Financial Officer; William C. Lemmer, Senior Vice President and General Counsel; Gary Halverson, Senior Vice President (Mr. Halverson ceased to serve as an executive officer prior to the signing of the merger agreement); Steven P. Geiger, Senior Vice President and Chief Administrative Officer; Douglas E. Meikle, Vice President and President—Valves and Measurement Systems; Stefan Radwanski, Vice President and President—Surface Systems; Steven Roll, Vice President and President—Process Systems; Hunter Jones, Vice President and President—Drilling Systems; and Dennis S. Baldwin, Vice President, Controller and Chief Accounting Officer.

Jack B. Moore retired from the role of Chief Executive Officer on October 5, 2015. In connection with his retirement, Mr. Moore’s then-existing equity awards and other benefits will be treated in accordance with certain retirement provisions of the applicable plans and he will not receive any severance or enhanced benefits as an executive in connection with the merger. As a result, unless specifically noted, Mr. Moore has been omitted from the discussion and tables below.

Certain key Cameron employees (including Messrs. Sledge, Lemmer, Geiger and Baldwin) are expected to provide transitional services to Schlumberger and Cameron following the effective time to assist in the post-closing integration process. These employees are referred to as “transitional employees” in the discussion below.

Treatment of Equity Awards. The general treatment of Cameron equity awards is described under the section entitled “The Merger Agreement—Treatment of Equity Awards” below. As of November 1, 2015, Cameron’s current or former executive officers (including Mr. Moore) held performance shares, which are subject to “single-trigger” accelerated vesting at the effective time (consistent with the treatment of performance shares held by employees generally), with an aggregate estimated value of $29,302,031, but with delivery of shares deferred as set forth in the original award agreement until the earlier of the end of the original performance period or termination of employment. The performance shares outstanding at the effective time will vest based on the methodology described under the section entitled “The Merger Agreement—Treatment of Equity Awards” below for current or former executive officers other than Messrs. Sledge and Lemmer. At the effective time, outstanding performance shares held by Messrs. Sledge and Lemmer will vest based on maximum performance levels for all performance periods under the terms of the change in control agreements applicable to them. Stock options and restricted stock units granted prior to September 1, 2015 are generally subject to “double-trigger” accelerated vesting upon a termination without “cause” or a resignation for “standard good reason.” Transitional employees will be treated as incurring a qualifying termination as of the effective time and, therefore, stock options and restricted stock units granted prior to September 1, 2015 and held by them as of the effective time will become fully vested as of the effective time.

For purposes of Cameron equity awards to be made from and after September 1, 2015, other than awards made to Mr. Rowe and transitional employees, the awards will immediately vest upon a termination following the consummation of the transaction either without cause or resignation for “modified good reason.” For transitional employees, accelerated vesting will be limited to a termination without cause and, for the first six months following the effective time, a resignation for modified good reason and, following such period, a resignation as a result of standard good reason. Standard good reason generally means, among other things, (1) a material change in the executive’s status, title or position or the assignment of duties inconsistent with the executive’s status, title or position, (2) a reduction in base salary or discontinuance of any benefit plan in which

 

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the executive participates or (3) the relocation of the executive’s principal place of employment to a location 25 miles further from the executive’s principal place of residence. “Cause” generally means (1) gross negligence of willful misconduct in the performance of any executive’s duties, (2) willful refusal to perform the executive’s duties, (3) breach of any material policy or code of conduct, (4) engaging in conduct that is materially injurious to the employer, (5) conviction of a felony or misdemeanor involving moral turpitude or (6) engaging in acts of dishonesty or impropriety that impair the executive’s effectiveness in his or her position. For purposes of equity grants from and after September 1, 2015, “Modified good reason” means (1) a major demotion or major reduction in job responsibilities, which for the avoidance of doubt, will not include changes in duties or reporting responsibilities resulting from Cameron ceasing to be a separate publicly traded company or becoming an indirect subsidiary of Schlumberger, (2) a major decrease in aggregate compensation opportunities for a fiscal year or (3) the relocation of an employee’s principal place of employment to a location 50 miles further from the employee’s principal residence.

Awards made to Mr. Rowe from and after September 1, 2015 will be subject to Cameron’s normal vesting schedule and will fully vest upon any termination following the consummation of the transaction. Option awards that are accelerated under any of the instances described above will remain exercisable for their full 10-year term.

As of November 1, 2015, Cameron’s executive officers (including Mr. Moore) held stock options and restricted stock units with an estimated value of $22,934,940.

Severance Arrangements. Each of Cameron’s executive officers is party to an individual change in control agreement. These change in control agreements are intended to provide for continuity of management focus in the event of a change in control. Cameron also maintains an Executive Severance Plan providing benefits to executives upon certain involuntary terminations of employment.

Under the change in control agreements, upon a termination without “cause” or a resignation for “good reason” during the period beginning on August 25, 2015 and ending on August 25, 2017 (or one year following the closing, if later), each executive officer would be entitled to a cash payment equal to the “applicable multiplier” (as described below) multiplied by (1) the executive’s base salary and (2) the greater of (A) the executive’s target bonus for the year of termination or (B) the highest bonus received over the preceding three-year period. In addition, each of Cameron’s executive officers is entitled to receive a payment equal to the product of the applicable multiplier and Cameron’s average cost of providing welfare benefits and perquisites to such executive officer over the three-year period preceding the executive’s termination of employment. Messrs. Geiger, Meikle, Roll and Baldwin also would be entitled to a cash payment equal to any unvested portion of Cameron’s contributions to their accounts under the Retirement Savings Plan or Deferred Compensation Plan. Finally, executive officers who entered into change in control agreements prior to 2010, including Messrs. Sledge and Lemmer, are entitled to a tax reimbursement payment in the event any payments or benefits received in connection with a change in control are subject to Section 280G or 4999 of the Code. The applicable multiplier is 3X for Messrs. Rowe, Sledge and Lemmer, 2X for the other executive officers except Mr. Baldwin and 1X for Mr. Baldwin. Transitional employees will become vested in their cash severance as of the effective time. Assuming that each of the executive officers was terminated without cause or resigned for good reason as of the effective time, which, for purposes of this disclosure is assumed to be November 1, 2015, the estimated aggregate cash severance that such executive officers would be entitled to receive is $24,429,740.

For purposes of the change in control agreements, “Cause” generally means, among other things, (1) conviction of a felony involving moral turpitude or (2) willful refusal to perform the executive’s duties that is materially and demonstrably injurious to the employer. “Good reason” generally means (1) a change in the executive’s status, title or position or the assignment of duties inconsistent with the executive’s status, title or position, (2) a reduction in base salary or discontinuance of any benefit plan in which the executive participates or (3) the relocation of the executive’s principal place of employment to a location 25 miles further from the executive’s principal place of residence.

 

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Under Cameron’s Executive Severance Plan, upon a termination without cause, “Tier 1”, “Tier 2” and “Tier 3” executives (which categories include the executive officers) would be entitled to a payment or payments equal to 2X, 1.5X and 1X base salary, respectively, and the cost of COBRA welfare benefit continuation for a 12-month period following termination. Executives are also entitled to outplacement services for a period of up to 12 months following termination. Benefits under the Executive Severance Plan are reduced by the benefits paid or payable under any other severance arrangement or contract to prevent duplication of benefits.

Further Actions. Schlumberger and Cameron have agreed that Cameron may grant retention bonuses and other awards or payments to employees in an aggregate amount not to exceed $50 million to be allocated to key Cameron employees, including executive officers, by Cameron in consultation with Schlumberger. Awards would be payable in cash subject to the terms and conditions agreed upon by Schlumberger and Cameron. Retention payments of approximately $1.95 million have been allocated to certain executive officers (none of whom is a named executive officer) as of the date of this proxy statement/prospectus. Cameron may grant ordinary course incentive compensation awards prior to the effective time, subject to such terms and conditions as are more fully described in the section entitled “The Merger Agreement—Certain Additional Agreements—Employee Matters.” Additionally, Schlumberger may enter into employment arrangements with certain members of Cameron senior management with respect to continuing roles with Schlumberger for periods following the effective time, including compensation arrangements for such roles, however, no such employment or compensation arrangements have been concluded as of this date.

Advisory Vote on Merger-Related Compensation for Cameron’s Named Executive Officers

The table below sets forth for each of Cameron’s named executive officers estimates of the amounts of compensation that are based on or otherwise relate to the merger and that will or may become payable to the named executive officer either immediately at the effective time (i.e., on a “single-trigger” basis) or on a qualifying termination of employment following, or prior to and in connection with, the merger (i.e., on a “double-trigger” basis). Cameron’s stockholders are being asked to approve, on a non-binding, advisory basis, such compensation for these named executive officers. Because the vote to approve such compensation is advisory only, it will not be binding on either Cameron or Schlumberger. Accordingly, if the proposal to adopt the merger agreement is approved by Cameron’s stockholders and the merger is completed, the compensation will be payable regardless of the outcome of the vote to approve such compensation, subject only to the conditions applicable thereto, which are described in the footnotes to the table below and above under “Interests of Cameron’s Directors and Executive Officers in the Merger.”

The potential payments in the table below are based on the following assumptions:

 

    the relevant price per share of Cameron common stock is $65.10, which equals the average closing price of a share of Cameron common stock over the five business day period following the first public announcement of the merger on August 26, 2015 and is the assumed price solely for purposes of this disclosure;

 

    the effective time of the merger is November 1, 2015, which is the assumed date of the effectiveness of the merger solely for purposes of this golden parachute compensation disclosure; and

 

    the named executive officers of Cameron are terminated without “cause” or resign for “good reason,” in either case immediately following the assumed effective time of the merger on November 1, 2015.

The amounts shown are estimates of amounts that would be payable to the named executive officers based on multiple assumptions that may or may not actually occur, including the assumptions described above. Some of the assumptions are based on information not currently available and, as a result, the actual amounts received by a named executive officer may differ materially from the amounts shown in the following table.

The following table, footnotes and discussion describe single and double-trigger benefits for the named executive officers.

 

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Golden Parachute Compensation(1)

 

Name    Cash ($)(2)      Equity ($)(3)      Tax
Reimbursement
($)(4)
     Total ($)  

R. Scott Rowe

President and Chief Executive Officer

     6,694,726         8,997,968         —           15,692,694   

Charles M. Sledge

Senior Vice President and

Chief Financial Officer

     4,124,448         8,997,476         5,021,984         18,143,908   

William C. Lemmer

Senior Vice President and

General Counsel

     3,259,536         6,992,579         —           10,252,115   

 

(1) Mr. Moore retired from the role of Chief Executive Officer on October 5, 2015. In connection with his retirement, Mr. Moore’s then-existing equity awards and other benefits will be treated in accordance with certain retirement provisions of the applicable plans and he will not receive any severance or enhanced benefits as an executive in connection with the merger. As a result, Mr. Moore has been omitted from the table above. In addition, Mr. Halverson was a named executive officer of Cameron for the period ended December 31, 2014, but has since entered into an agreement with Cameron covering his services through his planned retirement in 2016 and is no longer serving as an executive officer.
(2) The amounts reflect both single and double-trigger payments. The cash severance that each named executive officer would be entitled to in connection with the merger is described above under “Interests of Cameron’s Directors and Executive Officers in the Merger—Executive Officers—Severance Arrangements.” For Messrs. Rowe and Halverson, such amounts will be paid upon a qualifying termination following the effective time. Mr. Halverson’s severance benefit would be $2,014,746. These amounts are considered double-trigger payments. For Messrs. Sledge and Lemmer, who are transitional employees, the severance amounts will become vested as of the effective time. These amounts are considered single-trigger payments.
(3) The amounts reflect both single- and double-trigger payments. Estimated double-trigger payments reflect the unvested portion of stock options granted in 2013, 2014 and 2015, restricted stock units granted in 2012, 2013, 2014 and 2015, for which vesting would accelerate upon a qualifying termination following the effective time, and single-trigger payments generally reflect performance share awards granted in 2013, 2014 and 2015 (assuming, except in the case of Messrs. Sledge and Lemmer, target level performance), for which vesting would accelerate upon the effective time. Please see the section entitled “The Merger Agreement—Treatment of Equity Awards” for a description of the treatment of outstanding stock-based awards in connection with the merger. In the case of Messrs. Sledge and Lemmer, performance share awards are deemed to vest assuming maximum performance levels for all performance periods, consistent with the terms of the change in control agreements applicable to them. Additionally, for Messrs. Sledge and Lemmer, who are transitional employees, equity awards will become fully vested as of the effective time and are considered single-trigger payments. As of November 1, 2015, Mr. Halverson held unvested stock options, restricted stock units and performance share awards valued at $236,697, $642,146 and $1,877,679, respectively. As noted above, Mr. Moore’s equity awards outstanding as of the date of his retirement will be treated in accordance with certain retirement provisions of the relevant plans and award agreements. Consistent with all other employees, Mr. Moore’s outstanding performance share awards (valued at $9,374,270) will vest as of the effective time and continued vesting of his stock options and restricted stock units will be unaffected by the transaction. The actual amounts that would be received by the named executive officers may be higher or lower than the estimated amounts shown above. The estimated amounts are based on the assumptions detailed above with respect to the price per share of Cameron common stock of $65.10 and the effective time of the merger of November 1, 2015.

 

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Details of the single-trigger and double-trigger payments that would be received in connection with outstanding unvested equity awards are shown in the following supplementary table:

 

Name    Stock Options ($)      RSUs ($)     

Performance
Share Awards ($)

(single-trigger)

     Total ($)  
   Single-
trigger
     Double-
trigger
     Single-
trigger
     Double-
trigger
       

R. Scott Rowe

     —           347,350         —           5,965,243         2,685,375         8,997,968   

Charles M. Sledge

     313,721         —           2,544,434         —           6,139,321         8,997,476   

William C. Lemmer

     246,071         —           1,977,022         —           4,769,486         6,992,579   

 

(4) The amounts in this column reflect the reimbursement that the named executive officers would be contractually entitled to receive for any excise tax imposed on them under Section 4999 of the Internal Revenue Code in connection with the single-trigger and double-trigger payments and benefits that they received in connection with the merger (including, for example, accelerated vesting of equity awards and the termination-related payments and benefits described above). For a description of the contractual tax reimbursements, please see the section entitled “Interests of Cameron’s Directors and Executive Officers in the Merger—Executive Officers—Severance Arrangements.” The named executive officers are also eligible to receive certain retention bonuses and other awards or payments as more fully described in the section entitled “Interests of Cameron’s Directors and Executive Officers in the Merger—Executive Officers—Further Actions.”

Appraisal Rights

In connection with the merger, record holders of Cameron common stock who do not vote in favor of the proposal to adopt the merger agreement are entitled to appraisal rights under Section 262 of the DGCL, provided they fully comply with and follow the procedures and satisfy all of the conditions set forth in Section 262 of the DGCL. For more information regarding appraisal rights, see “The Merger—Appraisal Rights.” In addition, a copy of Section 262 of the DGCL is attached as Annex B to this proxy statement/prospectus. Failure to comply with Section 262 of the DGCL will result in your waiver of, or inability to exercise, appraisal rights.

Listing of Schlumberger Stock and Delisting and Deregistration of Cameron Stock

Schlumberger will apply to have the shares of its common stock to be issued and delivered in the merger approved for listing on the NYSE, where Schlumberger common stock is currently traded. If the merger is completed, shares of Cameron common stock will no longer be listed on the NYSE, and will be deregistered under the Exchange Act.

Restrictions on Sales of Shares of Schlumberger Common Stock Received in the Merger

Shares of Schlumberger common stock issued and delivered in the merger will not be subject to any restrictions on transfer arising under the Securities Act or the Exchange Act, except for shares of Schlumberger common stock issued and delivered to any Cameron stockholder who may be deemed to be an “affiliate” of Schlumberger after the completion of the merger. This proxy statement/prospectus does not cover resales of Schlumberger common stock received by any person upon the completion of the merger, and no person is authorized to make any use of this proxy statement/prospectus in connection with any resale.

Accounting Treatment

The merger will be accounted for as an acquisition of a business. Schlumberger will record net tangible and identifiable intangible assets acquired and liabilities assumed from Cameron at their respective fair values at the date of the completion of the merger. Any excess of the purchase price, over the fair value of the identifiable net assets of Cameron, will be recorded as goodwill.

The financial condition and results of operations of Schlumberger after completion of the merger will reflect Cameron’s balances and results after completion of the transaction but will not be restated retroactively to reflect

 

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the historical financial condition or results of operations of Cameron. Schlumberger’s earnings following the completion of the merger will reflect acquisition accounting adjustments, including the effect of changes in the carrying value for assets and liabilities on depreciation and amortization expense. Goodwill will not be amortized but will be tested for impairment at least annually, and all assets including goodwill will be tested for impairment when certain indicators are present. If, in the future, Schlumberger determines that tangible or intangible assets (including goodwill) are impaired, Schlumberger would record an impairment charge at that time.

Material U.S. Federal Income Tax Consequences

The following is a discussion of the material U.S. federal income tax consequences to Holders (as defined below) of (1) the exchange of their Cameron common stock for Schlumberger common stock and cash in the merger and (2) the ownership and disposition of Schlumberger common stock received in the merger. This discussion is based on the Internal Revenue Code of 1986, as amended, which we refer to as the Code, existing and proposed Treasury regulations promulgated under the Code, judicial decisions, published rulings, administrative pronouncements, and all other applicable authorities, all as in effect on the date of this proxy statement/prospectus and all of which are subject to change, possibly with retroactive effect. This discussion does not address any aspects of state, local, or non-U.S. laws or federal laws other than those relating to U.S. federal income taxation, is not a complete analysis or description of all of the possible tax consequences of the merger or of the ownership or disposition of shares of Schlumberger common stock, and does not address all tax considerations that may be relevant to a Holder in light of such Holder’s particular circumstances. This discussion addresses only Holders that own their shares of Cameron common stock and will own their shares of Schlumberger common stock as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment purposes). This discussion does not address all aspects of U.S. federal income taxation that may be relevant to a Holder in light of such Holder’s particular circumstances, including any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010, or to a Holder that is subject to special treatment under U.S. federal income tax law, including, for example:

 

    a bank or other financial institution;

 

    a tax-exempt entity;

 

    an insurance company;

 

    a person holding shares as part of a straddle, hedge, constructive sale, integrated transaction, or conversion transaction;

 

    an S corporation or other pass-through entity;

 

    a U.S. expatriate;

 

    a person who is liable for the alternative minimum tax;

 

    a broker-dealer or trader in securities;

 

    a U.S. Holder (as defined below) whose functional currency is not the U.S. dollar;

 

    a regulated investment company;

 

    a real estate investment trust;

 

    a trader in securities who has elected the mark-to-market method of accounting for its securities;

 

    any person that, at any time after the merger, owns, actually and/or constructively, 10% or more of the total combined voting power of all classes of stock entitled to vote of Schlumberger; and

 

    a person who received Cameron common stock through the exercise of employee stock options, through a tax qualified retirement plan, or otherwise as compensation.

 

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For purposes of this discussion, a “U.S. Holder” is any beneficial owner of Cameron common stock or, after the completion of the merger, Schlumberger common stock that, for U.S. federal income tax purposes, is:

 

    an individual citizen or resident alien of the United States;

 

    a corporation or other entity taxable as a corporation organized under the laws of the United States, any state thereof, or the District of Columbia;

 

    an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

 

    a trust if (1) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons has the authority to control all substantial decisions of the trust or (2) it has a valid election in place under applicable Treasury regulations to be treated as a U.S. person.

A “Non-U.S. Holder” is any beneficial owner of Cameron common stock or, after the completion of the merger, Schlumberger common stock that, for U.S. federal income tax purposes, is an individual, corporation, estate, or trust that is not a U.S. Holder.

As used in this discussion, a “Holder” means a U.S. Holder, a Non-U.S. Holder, or both, as the context may require.

If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds Cameron common stock or Schlumberger common stock, the tax treatment of a partner in that partnership generally will depend on the status of the partner and the activities of the partnership. If you are a partner in a partnership that holds Cameron common stock or Schlumberger common stock, you are urged to consult your tax advisor regarding the U.S. federal income tax consequences to you of the merger and the ownership and disposition of Schlumberger common stock received in the merger.

ALL HOLDERS OF CAMERON COMMON STOCK ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE PARTICULAR FEDERAL, STATE, LOCAL, AND NON-U.S. TAX CONSEQUENCES TO THEM OF THE MERGER AND THE OWNERSHIP AND DISPOSITION OF SCHLUMBERGER COMMON STOCK RECEIVED IN THE MERGER.

The Merger

U.S. Holders

The exchange of Cameron common stock for Schlumberger common stock and cash in the merger will be a taxable transaction for U.S. federal income tax purposes. Therefore, a U.S. Holder will recognize capital gain or loss equal to the difference, if any, between (1) the sum of the fair market value of Schlumberger common stock and cash received by such Holder in the merger, including any cash received in lieu of fractional shares of Cameron common stock, and (2) the U.S. Holder’s adjusted tax basis in its Cameron common stock. A U.S. Holder’s adjusted tax basis in its Cameron common stock will generally equal the Holder’s purchase price for such stock.

Capital gains of a non-corporate U.S. Holder will be eligible for the preferential U.S. federal income tax rates applicable to long-term capital gains if the U.S. Holder has held its Cameron common stock for more than one year as of the date of the merger. The deductibility of capital losses is subject to limitations. If a U.S. Holder acquired different blocks of shares of Cameron common stock at different times or different prices, the U.S. Holder must determine its tax basis and holding period separately for each block of Cameron common stock.

A U.S. Holder’s aggregate tax basis in Schlumberger common stock received in the merger will equal the fair market value of such stock as of the date of the merger. A U.S. Holder’s holding period in Schlumberger common stock received in the merger will begin the day after the merger.

 

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Non-U.S. Holders

A Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain recognized on the exchange of Cameron common stock for Schlumberger common stock and cash in the merger unless:

 

    the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if an income tax treaty applies, is attributable to a U.S. permanent establishment of the Non-U.S. Holder);

 

    the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year that includes the merger and certain other conditions are satisfied; or

 

    Cameron is or has been a United States real property holding corporation, which we refer to as a USRPHC, at any relevant time within the shorter of the five-year period preceding the merger or the Non-U.S. Holder’s holding period, and the Non-U.S. Holder holds, or has held at any time during such period, more than 5% of the Cameron common stock.

If the Non-U.S. Holder’s gain is described in the first bullet, then the Non-U.S. Holder will generally be subject to U.S. federal income tax under the rules described above as if it were a U.S. Holder of Cameron common stock and, in the case of a foreign corporation, may be subject to an additional “branch profits tax” at a 30% rate (or such lower rate as may be specified by an applicable income tax treaty).

If the Non-U.S. Holder is described in the second bullet, then such Non-U.S. Holder will be subject to U.S. federal income tax at a 30% rate (or such lower rate as may be specified by an applicable income tax treaty) on the gain, which may be offset by certain U.S. source capital losses of the Non-U.S. Holder.

Regarding the third bullet, Cameron does not believe that it is or has been a USRPHC within the past five years.

Information Reporting and Backup Withholding

Schlumberger common stock and cash received by a U.S. Holder or a Non-U.S. Holder in the merger, under certain circumstances, may be subject to information reporting and backup withholding, unless such Holder provides proof of an applicable exemption or furnishes its taxpayer identification number and otherwise complies with all applicable requirements under the backup withholding rules. Any amounts withheld under the backup withholding rules are not additional tax and may be allowed as a refund or credit against the Holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

Ownership and Disposition of Schlumberger Common Stock Received in the Merger

The following is a discussion of the U.S. federal income tax consequences of the ownership and disposition by U.S. Holders and Non-U.S. Holders of Schlumberger common stock received in the merger.

U.S. Holders

Distributions

Subject to the discussion below under “—Passive Foreign Investment Company Considerations,” distributions, if any, made with respect to shares of Schlumberger common stock will constitute dividends for U.S. federal income tax purposes to the extent of Schlumberger’s current-year or accumulated earnings and profits as determined for U.S. federal income tax purposes. The gross amount of dividends that a U.S. Holder receives generally will be subject to U.S. federal income taxation as dividend income and will not be eligible for the dividends-received deduction generally allowed to U.S. corporations. Subject to exceptions for short-term or hedged positions, non-corporate U.S. Holders will be subject to U.S. federal income taxation at reduced rates with respect to “qualified dividends.” Dividends paid by Schlumberger on shares of Schlumberger common stock will be treated as “qualified dividends” as long as (1) the Schlumberger common stock is readily tradable on the

 

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NYSE and (2) Schlumberger was not, in its taxable year prior to the year in which the dividend is paid, and is not, in its taxable year in which the dividend is paid, a passive foreign investment company, which we refer to as a PFIC. As described below, Schlumberger believes that it has not been a PFIC in any prior year, will not be a PFIC for the taxable year in which the merger occurs, and will not become a PFIC in the future.

To the extent that a distribution exceeds Schlumberger’s current-year and accumulated earnings and profits as determined for U.S. federal income tax purposes, such distribution will be treated as a nontaxable return of capital to the extent of the U.S. Holder’s tax basis in the shares (with a corresponding reduction in such tax basis) and thereafter will be treated as capital gain. Such capital gain will be long-term capital gain if the U.S. Holder’s holding period for the Schlumberger common stock exceeds one year.

Sale or Other Taxable Disposition of Schlumberger Common Stock

Subject to the discussion below under “—Passive Foreign Investment Company Considerations,” a U.S. Holder will generally recognize capital gain or loss on any sale or other taxable disposition of Schlumberger common stock in an amount equal to the difference, if any, between the amount realized on such disposition and the U.S. Holder’s adjusted tax basis in such stock. Capital gains of a non-corporate U.S. Holder will be eligible for the preferential U.S. federal income tax rates applicable to long-term capital gains if the U.S. Holder has held its Schlumberger common stock for more than one year as of the date of the disposition. The deductibility of capital losses is subject to limitations.

Passive Foreign Investment Company Considerations

In general, a foreign corporation such as Schlumberger will be classified as a PFIC for any taxable year in which either (1) 75% or more of its gross income is passive income (generally, dividends, interest, gains from the sale or exchange of investment property, and certain rents and royalties) or (2) at least 50% of the average value of its assets consists of assets that produce, or that are held for the production of, passive income. For purposes of applying these tests, the foreign corporation is deemed to own its proportionate share of the assets of, and to receive directly its proportionate share of the income of, any other corporation in which the foreign corporation owns, directly or indirectly, at least 25% of the value of the stock.

If Schlumberger were classified as a PFIC, then U.S. Holders could be subject to various adverse consequences with respect to the ownership and disposition of Schlumberger common stock unless the U.S. Holders make certain elections. These adverse consequences include taxation of gain on a sale or other disposition of Schlumberger common stock and taxation of certain distributions (which may include distributions that would otherwise be treated as “qualified dividends”) at the maximum ordinary income rates and the imposition of an interest charge on such gain and distributions.

Schlumberger believes that it has not been a PFIC in any prior taxable year, will not be a PFIC in the taxable year in which the merger occurs, and will not become a PFIC in the future. However, because the tests for determining PFIC status are applied annually, and it is difficult to accurately predict future income and assets relevant to this determination, there can be no assurance that Schlumberger will not become a PFIC. U.S. Holders are urged to consult their tax advisors regarding the application of the PFIC rules to their investment in Schlumberger common stock, including the availability of certain shareholder elections.

Specified Foreign Financial Assets

Individual U.S. Holders that own “specified foreign financial assets” with an aggregate value in excess of $50,000 are generally required to file an information statement along with their tax returns, currently on IRS Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a foreign financial institution, as well as securities issued by a foreign issuer (which would include Schlumberger common stock) that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Treasury regulations have been

 

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proposed that, if finalized, would extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. Holders who fail to report the required information could be subject to substantial penalties. U.S. Holders are urged to consult their tax advisors concerning the application of these rules to their investment in Schlumberger common stock.

Non-U.S. Holders

Distributions

A Non-U.S. Holder generally will not be subject to U.S. federal income tax or withholding on dividends in respect of Schlumberger common stock. However, if such dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if an income tax treaty applies, is attributable to a U.S. permanent establishment of the Non-U.S. Holder), then the Non-U.S. Holder will generally be subject to U.S. federal income tax under the rules described above as if it were a U.S. Holder of Schlumberger common stock and, in the case of a foreign corporation, may be subject to an additional “branch profits tax” at a 30% rate (or such lower rate as may be specified by an applicable income tax treaty).

Sale or Other Taxable Disposition of Schlumberger Common Stock

A Non-U.S. Holder generally will not be subject to U.S. federal income tax or withholding on any gain recognized on a sale or other taxable disposition of Schlumberger common stock unless:

 

    the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if an income tax treaty applies, is attributable to a U.S. permanent establishment of the Non-U.S. Holder); or

 

    the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year that includes the merger and certain other conditions are satisfied.

If the Non-U.S. Holder’s gain is described in the first bullet, then the Non-U.S. Holder will generally be subject to U.S. federal income tax under the rules described above as if it were a U.S. Holder of Schlumberger common stock and, in the case of a foreign corporation, may be subject to an additional “branch profits tax” at a 30% rate (or such lower rate as may be specified by an applicable income tax treaty).

If the Non-U.S. Holder is described in the second bullet, then such Non-U.S. Holder will be subject to U.S. federal income tax at a 30% rate (or such lower rate as may be specified by an applicable income tax treaty) on the gain, which may be offset by certain U.S. source capital losses of the Non-U.S. Holder.

Information Reporting and Backup Withholding

Dividends paid with respect to shares of Schlumberger common stock and proceeds from a sale or other disposition of shares of Schlumberger common stock received in the United States or through certain U.S.-related financial intermediaries may be subject to information reporting and backup withholding unless the Holder provides proof of an applicable exemption or furnishes its taxpayer identification number and otherwise complies with all applicable requirements under the backup withholding rules. Any amounts withheld under the backup withholding rules are not additional tax and may be allowed as a refund or credit against the Holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

Regulatory Approvals Required for the Merger

Antitrust Approvals

The merger is subject to review by the Antitrust Division under the HSR Act. Under the HSR Act, Schlumberger and Cameron are required to make premerger notification filings and to await the expiration or early termination of the statutory waiting period (and any extension of the waiting period) prior to completing the

 

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merger. On September 16, 2015, Schlumberger and Cameron each filed a Premerger Notification and Report Form with the Antitrust Division and the Federal Trade Commission, which we refer to as the FTC. On October 16, 2015, Schlumberger withdrew its filing and refiled on October 19, 2015 in order to provide the Antitrust Division and the FTC with an additional 30-day period to review the companies’ filings.

The merger is also subject to antitrust review by government authorities in several foreign jurisdictions in which the companies have a sufficient presence to require filings. As of the date of this proxy statement/prospectus, the parties have made, or are about to make, antitrust filings in the European Union and in certain other jurisdictions.

Under the terms of the merger agreement, Schlumberger has the right, but not the obligation, to oppose or refuse to consent, through litigation or otherwise, to any request, attempt or demand by any governmental entity or other person for any divestiture, hold separate condition or any other restriction with respect to any assets, businesses or product lines of Schlumberger, Cameron or any of their respective subsidiaries and has the obligation to defend any litigation instituted by a governmental entity or other person with respect to the legality of the merger under applicable regulatory laws. Please see “The Merger Agreement—Certain Additional Agreements—Filings” for more information. If the merger has not occurred on or before the termination date due to the failure to obtain regulatory clearances, or if an order, decree or ruling permanently prohibits the merger, the merger agreement may be terminated.

There can be no assurance that the merger will not be challenged on antitrust or competition grounds or, if a challenge is made, what the outcome would be. The Antitrust Division, the FTC, any U.S. state and other applicable U.S. or non-U.S. regulatory bodies may challenge the merger on antitrust or competition grounds at any time, including after the expiration or termination of the waiting period under the HSR Act or other applicable process, as they may deem necessary or desirable or in the public interest. Accordingly, at any time before or after the completion of the merger, any such party could take action under the antitrust laws, including, without limitation, by seeking to enjoin the effective time of the merger or permitting completion subject to regulatory concessions or conditions. Private parties may also seek to take legal action under antitrust or competition laws under certain circumstances.

Other Regulatory Procedures

The merger may be subject to certain regulatory requirements of other municipal, state and federal, domestic or foreign, governmental agencies and authorities, including those relating to the offer and sale of securities. Schlumberger and Cameron are currently working to evaluate and comply in all material respects with these requirements, as appropriate, and do not currently anticipate that they will hinder, delay or restrict completion of the merger.

Closing and Effective Time

Unless the parties otherwise mutually agree, the closing of the merger will occur on the first business day, or, if Schlumberger so elects, on the third business day, after all the conditions to the closing of the merger are fulfilled or waived (other than those conditions that by their nature are to be fulfilled at the closing of the merger, but subject to the fulfillment or waiver of such conditions). Subject to the satisfaction or waiver of the conditions to the closing of the merger described in the section entitled “The Merger Agreement—Conditions to the Merger,” including the approval of the proposal to adopt the merger agreement by Cameron’s stockholders at the special meeting, it is anticipated that the merger will close in the first quarter of 2016. It is possible that factors outside the control of both companies could result in the merger being completed at a different time, or not at all.

The effective time will occur on the date a certificate of merger is filed with the Delaware Secretary of State, or at such later time as Schlumberger and Cameron designate in the certificate of merger.

 

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Litigation Relating to the Merger

Subsequent to the announcement of the merger, Cameron, Cameron’s directors, Schlumberger US, Merger Sub and Schlumberger were named as defendants in four purported class action lawsuits relating to the proposed transaction that were filed in the Court of Chancery of the State of Delaware. These lawsuits were consolidated for all purposes under the caption In re Cameron International Corp. Stockholders Litigation, Case No. 11506-VCN, and a Consolidated Amended Class Action Complaint (the “Consolidated Complaint”) was filed. The Consolidated Complaint generally alleges that Cameron’s directors breached their fiduciary duties to Company stockholders by, among other things, agreeing to enter into the transaction for an allegedly unfair price and as the result of an allegedly unfair process. The Consolidated Complaint also alleges that Cameron, Schlumberger US, Merger Sub and Schlumberger aided and abetted the alleged breaches by Cameron’s directors. The Consolidated Complaint seeks various remedies, including enjoining the merger from being consummated, rescission of the merger to the extent already implemented and the plaintiffs’ costs and fees.

On October 30, 2015, plaintiffs in the consolidated class action moved to expedite discovery and to preliminarily enjoin the consummation of the merger. On November 6, 2015, following Cameron’s agreement to make certain supplemental disclosures, plaintiffs withdrew both their motion for expedited discovery and their motion for a preliminary injunction.

Cameron and Schlumberger expect similar lawsuits may be filed in the future.

Cameron and Schlumberger believe that the lawsuits in which they are named are without merit and intend to defend the lawsuits vigorously.

 

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THE MERGER AGREEMENT

The following describes the material provisions of the merger agreement but does not purport to describe all of the terms of the merger agreement. The provisions of the merger agreement are complicated and not easily summarized. The following summary may not contain all of the information about the merger agreement that is important to you and is qualified in its entirety by reference to the complete text of the merger agreement, which is attached as Annex A to this proxy statement/prospectus and incorporated into this proxy statement/prospectus by reference. Schlumberger and Cameron urge you to read the full text of the merger agreement before making any decisions regarding the merger, including approval of the proposal to adopt the merger agreement, because it is the legal document that governs the merger.

Representations, Warranties and Covenants in the Merger Agreement Are Not Intended to Function or Be Relied on as Public Disclosures

In reviewing the merger agreement, please remember that it is included to provide you with information regarding its terms and is not intended to provide any other factual information about Schlumberger or Cameron. The merger agreement contains representations and warranties by each of the parties to the merger agreement. These representations and warranties have been made solely for the benefit of the other parties to the merger agreement and:

 

    may be intended not as statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate,

 

    have been qualified by certain disclosures that were made to the other party in connection with the negotiation of the merger agreement, which disclosures are not reflected in the merger agreement, and

 

    may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors.

Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement/prospectus, may have changed since the date of the merger agreement, and subsequent developments or new information qualifying a representation or warranty may have been included in or incorporated by reference into this proxy statement/prospectus.

For the foregoing reasons, the representations, warranties and covenants or any descriptions of those provisions should not be read alone or relied upon as characterizations of the actual state of facts or condition of Schlumberger, Cameron or any of their respective subsidiaries or affiliates. Instead, such provisions or descriptions should be read only in conjunction with the other information provided elsewhere in this document or incorporated by reference into this proxy statement/prospectus, as described in the section titled “Where You Can Find More Information.”

Structure of the Merger

The merger agreement contemplates a merger whereby Merger Sub will be merged with and into Cameron, with Cameron continuing as the surviving corporation. Upon completion of the merger, Cameron will be a wholly-owned subsidiary of Schlumberger US and Cameron common stock will no longer be publicly traded. Upon effectiveness of the merger, each Cameron stockholder will have the right to receive the merger consideration as described below under “—Merger Consideration.”

Effective Time; Closing

The merger will become effective on the date a certificate of merger is filed with the Delaware Secretary of State, or at such later time as Schlumberger and Cameron designate in the certificate of merger. The merger

 

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agreement provides that, unless agreed otherwise, the closing of the merger will take place on the first business day or, if Schlumberger so elects, on the third business day, after all the conditions to the closing of the merger are fulfilled or waived in accordance with the agreement.

Merger Consideration

The merger agreement provides that at the effective time of the merger, each share of Cameron common stock issued and outstanding immediately prior to the effective time will be converted into the right to receive (1) 0.716 shares of Schlumberger common stock and (2) $14.44 in cash, without interest, together with any cash in lieu of fractional shares as described under “—Fractional Shares.” In this discussion, (A) the number of shares of Schlumberger common stock to be received for each share of Cameron common stock is referred to as the “exchange ratio,” (B) the amount of cash to be received for each share of Cameron common stock is referred to as the “per share cash amount” and (C) the Schlumberger common stock issuable based on the exchange ratio, the cash payable based on the per share cash amount and the cash payable in lieu of any fractional shares is referred to as the “merger consideration.”

Fractional Shares

No fractional shares of Schlumberger common stock will be delivered to any holder of Cameron common stock upon completion of the merger. For each fractional share that would otherwise be delivered, Schlumberger will pay cash (without interest) in an amount equal to the fractional share multiplied by the closing price for a share of Schlumberger common stock on the NYSE Composite Transactions Tape on the business day immediately preceding the closing date.

Treatment of Equity Awards

Stock Options. At the effective time of the merger, all outstanding options to purchase shares of Cameron common stock, including any options granted following the execution of the merger agreement, will be converted into options to purchase shares of Schlumberger common stock with the duration and terms of such converted options to remain generally the same as the original Cameron option. The number of shares of Schlumberger common stock subject to each option will be determined by multiplying the number of shares of Cameron common stock subject to the original Cameron option by the equity award exchange ratio, rounded down to the nearest whole share. The option exercise price per share of Schlumberger common stock will be equal to the option exercise price per share of Cameron common stock under the original Cameron option divided by the equity award exchange ratio, rounded up to the nearest whole cent. The term “equity award exchange ratio” means (1) the exchange ratio (0.716) plus (2) the quotient obtained by dividing $14.44 by the average of the volume weighted average price of a share of Schlumberger common stock as reported on the NYSE Composite Transactions Tape on each of the five consecutive trading days ending with the second complete trading day prior to the effective time of the merger.

Restricted Stock Units. At the effective time of the merger, each outstanding award of restricted stock units granted by Cameron under any of its plans, including any restricted stock units granted following the execution of the merger agreement, will be converted into an award of restricted stock units that will be settled in Schlumberger common stock with substantially the same terms as the original Cameron award, including the vesting schedule and any conditions and restrictions on receipt. The number of shares of Schlumberger common stock subject to the converted restricted stock unit award will be determined by multiplying the number of shares of Cameron common stock subject to the original Cameron restricted stock unit award by the equity award exchange ratio, rounded to the nearest whole number of shares.

Deferred Stock Units. At the effective time of the merger, each outstanding award of deferred stock units granted by Cameron under any of its plans will be canceled and converted into the right to receive the merger consideration based on the total number of shares of Cameron common stock subject to the outstanding award.

 

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Performance Share Awards. At the effective time of the merger, each outstanding award of performance shares granted by Cameron under any of its plans will be converted into fully vested deferred stock units that will be settled in Schlumberger common stock on the same payment schedule as the original Cameron award. For purposes of determining the number of performance shares earned under the original Cameron performance share award, unless otherwise specified in an individual change in control agreement with an employee, (1) performance with respect to the total shareholder return metric will be determined based on total shareholder return as of the effective time and (2) performance with respect to the return on invested capital (ROIC) metric will be determined as follows: (A) for any completed performance year prior to the effective time, based on actual ROIC performance as certified by the Cameron compensation committee, (B) if the effective time occurs in 2015, based on actual ROIC through the effective time (or the most recent practicable date prior to the effective time) and a reasonable good faith estimate of ROIC performance for the remainder of 2015 and (C) target performance for any other performance year.

Converted Award Terms. Each converted equity award will, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reclassification, recapitalization or other similar transaction of Schlumberger common stock. The compensation committee of the board of directors of Schlumberger will have authority and responsibility for the converted equity awards and each converted award is subject to administrative procedures consistent with those in effect under Schlumberger’s equity compensation plans. Each converted award will be provided with dividend equivalent rights to the extent provided to Schlumberger awards of a comparable type.

Exchange of Shares; Stock Transfer Books

The conversion of Cameron common stock into the right to receive the merger consideration will occur automatically at the effective time of the merger. Immediately before the effective time, Schlumberger will issue to Schlumberger US, by way of sale or as a contribution to the capital of Schlumberger US or a combination thereof, that number of shares of Schlumberger common stock that are to be delivered by Schlumberger US to Cameron stockholders pursuant to the merger agreement. Immediately thereafter, Schlumberger US will deposit with a commercial bank or trust company, as the exchange agent for the merger, the number of shares of Schlumberger common stock to be delivered pursuant to the merger agreement and an amount of cash representing the aggregate cash consideration payable pursuant to the merger agreement.

Promptly after the effective time of the merger, Schlumberger US will cause the exchange agent to send to each holder of record of Cameron common stock at the effective time of the merger a letter of transmittal and instructions for effecting the exchange of Cameron common stock for the merger consideration the holder is entitled to receive under the merger agreement. Upon surrender of the certificates or book-entry shares for cancellation along with the executed letter of transmittal and other documents, a Cameron stockholder will receive some or all of the following: (1) one or more shares of Schlumberger common stock; (2) cash consideration in accordance with the per share cash amount; (3) cash in lieu of fractional shares of Schlumberger common stock; and (4) any unpaid dividends and distributions declared and paid in respect of Schlumberger common stock after completion of the merger.

Six months after the effective time of the merger, Schlumberger US will be entitled to require the exchange agent to return any shares of Schlumberger common stock remaining in the exchange fund and any cash that remains unclaimed. Holders of Cameron common stock who have not exchanged their certificates or book-entry shares representing such stock prior to that time may thereafter look only to Schlumberger US to exchange their stock certificates or book-entry shares or to pay amounts to which they are entitled pursuant to the merger agreement. None of Schlumberger US, Merger Sub, Schlumberger, Cameron, the surviving corporation or the exchange agent will be liable to any holder of Cameron common stock certificates or book-entry shares for any merger consideration delivered to a public official pursuant to applicable abandoned property, escheat or similar laws.

 

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Lost, Stolen or Destroyed Certificates

If a certificate has been lost, stolen or destroyed, then, before a Cameron stockholder will be entitled to receive the merger consideration (or dividends or distributions with respect thereto), such holder will need to deliver an affidavit of that fact and, if reasonably required by Schlumberger, post a bond or surety (in such amount as Schlumberger may reasonably direct) as indemnity against any claim that may be made in respect of such lost certificate.

Appraisal Rights

In connection with the merger, record holders of Cameron common stock who do not vote in favor of the proposal to adopt the merger agreement and who otherwise fully comply with the applicable provisions of Section 262 of the DGCL will be entitled to exercise appraisal rights thereunder. Any shares of Cameron common stock held by a Cameron stockholder as of the record date who has not voted in favor of the proposal to adopt the merger agreement and who has demanded appraisal for such shares in accordance with the DGCL will not be converted into a right to receive the merger consideration, unless such holder fails to perfect or withdraws or otherwise loses the right to appraisal under the DGCL. If, after the effective time, such holder of Cameron common stock fails to perfect or withdraws or otherwise loses his, her or its appraisal rights, each such share will be treated as if it had been converted as of the effective time into a right to receive the merger consideration.

Under the merger agreement, Cameron must give Schlumberger (1) prompt notice of any written demands for appraisal, attempted withdrawals of such demands and any other instruments received by Cameron relating to stockholders’ rights of appraisal and (2) the opportunity to direct all negotiations and proceedings with respect to demands for appraisal under the DGCL. Cameron may not, except with the prior written consent of Schlumberger, voluntarily make any payment with respect to any demands for appraisal, settle or offer to settle any such demands or approve any withdrawal of any such demands.

THE PROCESS OF DEMANDING AND EXERCISING APPRAISAL RIGHTS REQUIRES STRICT COMPLIANCE WITH TECHNICAL PREREQUISITES. IF YOU WISH TO EXERCISE YOUR APPRAISAL RIGHTS, YOU SHOULD CONSULT WITH YOUR OWN LEGAL COUNSEL IN CONNECTION WITH COMPLIANCE UNDER SECTION 262 OF THE DGCL, THE FULL TEXT OF WHICH IS ATTACHED TO THIS PROXY STATEMENT/PROSPECTUS AS ANNEX B.

Withholding Taxes

Schlumberger US, the surviving corporation and the exchange agent will be entitled to deduct and withhold from consideration payable to any Cameron stockholder the amounts that may be required to be withheld under any applicable tax law. Amounts withheld and paid over to a governmental entity will be treated for all purposes of the merger as having been paid to the stockholders from whom they were withheld.

Representations and Warranties

The merger agreement contains representations and warranties made by each of the parties regarding aspects of their respective businesses, financial condition and structure, as well as other facts pertinent to the merger. Cameron, on the one hand, and Schlumberger US, Merger Sub and Schlumberger, on the other hand, have made representations and warranties in the merger agreement with respect to the following subject matters:

 

    existence, good standing and qualification to conduct business;

 

    requisite power and authorization to enter into and carry out the obligations of the merger agreement and the enforceability of the merger agreement;

 

    capitalization;

 

    compliance with applicable laws and permits;

 

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    absence of any conflict or violation of organizational documents, third party agreements or laws as a result of the merger or the merger agreement;

 

    filings and reports with the SEC and financial information;

 

    accuracy of information supplied for inclusion or incorporation in this proxy statement/prospectus;

 

    absence of litigation;

 

    absence of a material adverse effect;

 

    absence of decrees or injunctions;

 

    ownership of the other party or parties’ capital stock;

 

    compliance with export controls and trade sanctions; and

 

    compliance with the Foreign Corrupt Practices Act and other anticorruption and antibribery laws.

Cameron, on the one hand, and Schlumberger, on the other hand, have made additional representations and warranties in the merger agreement with respect to the following subject matters:

 

    absence of undisclosed liabilities;

 

    compliance with the Sarbanes-Oxley Act of 2002 and the applicable listing and corporate governance rules and regulation of the NYSE; and

 

    internal accounting controls and disclosure controls and procedures.

Cameron has made additional representations and warranties to Schlumberger US and Schlumberger in the merger agreement with respect to the following subject matters:

 

    tax matters;

 

    employee benefit plans;

 

    labor matters;

 

    title to properties and absence of liens;

 

    environmental matters;

 

    intellectual property;

 

    insurance;

 

    fees payable to brokers, finders or investment banks in connection with the merger;

 

    required stockholder approval in connection with the merger;

 

    material contracts;

 

    relationships with Cameron’s customers and suppliers; and

 

    inapplicability of anti-takeover laws or certain provisions in Cameron’s certificate of incorporation.

Schlumberger US and Merger Sub have made additional representations and warranties to Cameron in the merger agreement with respect to:

 

    the status of Merger Sub; and

 

    the availability of sufficient funds with which to pay the cash portion of the merger consideration.

 

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Certain representations and warranties of Schlumberger US, Merger Sub, Schlumberger and Cameron are qualified as to materiality or as to “material adverse effect,” which when used with respect to Schlumberger US, Merger Sub, Schlumberger or Cameron means, as the case may be:

 

    a material adverse effect on or material adverse change in the business, assets, liabilities, financial condition or results of operations of such party and its subsidiaries, taken as a whole, other than any effect or change relating to or resulting from:

 

    changes or conditions affecting the economy or financial markets in general, including changes in interest or exchange rates;*

 

    changes or conditions in the industries in which the party operates, including changes in or changes, effects, events or occurrences generally affecting the prices of oil, gas, natural gas, natural gas liquids or other commodities;*

 

    the announcement or the existence of, or compliance with, or taking any action required or permitted by the merger agreement or the transactions contemplated by the merger agreement or any stockholder litigation against Cameron and/or its directors or officers relating to the transactions contemplated by the merger agreement;

 

    taking any action by such party at the written request of Schlumberger US, Merger Sub or Schlumberger, in the case of Cameron, or of Cameron, in the case of Schlumberger US, Merger Sub or Schlumberger;

 

    any weather-related or other force majeure event or outbreak or escalation of hostilities or acts of war (whether or not declared) or terrorism;*

 

    changes in applicable law or in GAAP or in accounting standards, or any changes in the interpretation or enforcement of any of the foregoing, or any changes in general legal, regulatory or political conditions;*

 

    any change in such party’s credit ratings;

 

    any decline in the market price, or change in trading volume, of the capital stock of such party; or

 

    any failure to meet any internal or public projections, forecasts, guidance, estimates, milestones, budgets or internal or published financial or operating predications of revenue, earnings, cash flow or cash position;

provided that, in the case of the four bullets marked with an asterisk above, to the extent the impact on the party in question and its subsidiaries, taken as a whole, is disproportionate to the impact on other similarly situated entities, the incrementally disproportionate impact or impacts may be taken into account in determining whether there has been, or would reasonably be expected to be, a material adverse effect; or

 

    a material adverse effect on or material adverse change in the ability of the party to perform its obligations under the merger agreement or to consummate the merger and the other transactions contemplated by the merger agreement.

Conduct of Business Pending the Effective Time

Unless Schlumberger otherwise consents in writing (which consent may not be unreasonably withheld, conditioned or delayed), or as otherwise contemplated by the merger agreement or required by law, Cameron has agreed that, prior to the effective time of the merger, it will:

 

    conduct its business in the ordinary course;

 

    use reasonable best efforts to preserve its business organization intact;

 

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    use reasonable best efforts to maintain existing relationships and goodwill with governmental entities, customers, suppliers, distributors, creditors, lessors, employees and business associates; and

 

    use reasonable best efforts to keep available the services of present employees and agents.

In addition, the merger agreement places specific restrictions on the ability of Cameron and its subsidiaries to, unless Schlumberger otherwise consents in writing (which consent may not be unreasonably withheld, conditioned or delayed), or as otherwise contemplated by the merger agreement or required by law, among other things:

 

    adopt any change in, or waive any provision of, their organizational documents;

 

    merge or consolidate Cameron or any of its subsidiaries with any other person, except transactions among wholly-owned subsidiaries of Cameron that are not obligors or guarantors of third-party indebtedness or in connection with a permitted acquisition;

 

    issue, sell or pledge any shares of capital stock, options, warrants, convertible securities or any other equity interest, except pursuant to stock options and current employee benefit plans;

 

    except to the extent required under a benefit plan existing on August 25, 2015 or as required by law:

 

    increase the compensation (including bonus opportunities) or fringe benefits of any directors, executive officers or employees, except in the ordinary course of business to employees who are not party to change of control agreements;

 

    grant any severance or termination pay, other than nominal severance to terminated employees, except in the ordinary course of business consistent with past practice;

 

    make new equity awards to any director, officer or employee, except in the ordinary course of business consistent with past practice, which equity awards will provide that the consummation of the transactions contemplated by the merger agreement will not alone result in a change-in-control acceleration and are subject to additional restrictions as described in “The Merger Agreement—Certain Additional Agreements—Employee Matters”;

 

    enter into or amend any employment, consulting, change-in-control or severance agreement with any director, executive officer or employee, except as contemplated by the merger agreement or, except with respect to employees party to a change-in-control agreement or their direct reports, in the ordinary course of business;

 

    establish, adopt, enter into, freeze or amend in any material respect or terminate any benefit plan or take any action to accelerate entitlement to benefits under any benefit plan, except as contemplated by the merger agreement;

 

    make any contribution to a benefit plan, except as required by law or in the ordinary course of business consistent with past practice;

 

    make payments on performance-based awards in excess of the performance actually achieved, or amend or waive performance or vesting criteria or accelerate vesting, except as required under the applicable plan or contemplated by the merger agreement;

 

    terminate any employee with a change-in-control agreement, other than for cause, or take any actions with respect to salary, compensation, benefits or other terms and conditions of employment that would result in the employee having “good reason” to terminate employment and collect severance payments and benefits pursuant to the employee’s change-in-control agreement;

 

    execute or amend a collective bargaining agreement except in the ordinary course of business;

 

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    declare or pay any dividend or other distribution or payment, except for certain intercompany distributions, pro rata dividends by any subsidiary of Cameron included in the Subsea segment of Cameron and dividends or distributions required under Cameron’s or its subsidiaries’ organizational documents;

 

    redeem, purchase or otherwise acquire any of Cameron’s or its subsidiaries’ stock, except for transactions pursuant to benefit plans and intercompany transactions;

 

    sell, encumber or dispose of any assets or properties having a value in excess of $25 million for one asset, or $100 million in the aggregate, except for sales of surplus or obsolete equipment, inventory sales and intercompany transactions;

 

    acquire any business, entity or division for consideration in excess of $50 million for one acquisition or $100 million in the aggregate;

 

    enter into a joint venture, partnership or similar arrangement or make a loan or other investment in any other person in excess of $20 million individually, or $50 million in the aggregate;

 

    other than in the ordinary course of business, sell, transfer, license or modify any rights to any material intellectual property, or distribute, license or co-promote products or services licensed by Cameron or any of its subsidiaries;

 

    change financial accounting policies or procedures, except as required by changes in GAAP or applicable law;

 

    except as required by applicable law, take specified actions with respect to tax matters if any such action would have an adverse effect on Cameron and its subsidiaries that is material;

 

    settle or waive any material claim, litigation or controversy for amounts in excess of $10 million individually, or $30 million in the aggregate;

 

    incur any indebtedness except for (1) borrowings under Cameron’s existing credit facilities, (2) other debt not in excess of $100 million in the aggregate and (3) intercompany debt in the ordinary course of business;

 

    repurchase or repay any debt, except in the ordinary course of business, for mortgage indebtedness in accordance with its terms and for intercompany debt in the ordinary course of business;

 

    mortgage or encumber any material asset or property, other than in the ordinary course of business;

 

    except for capital expenditures consistent in all material respects with the capital budget made available to Schlumberger, make any unbudgeted capital expenditures exceeding $25 million in the aggregate;

 

    enter into, materially amend or terminate material contracts, except in the ordinary course of business consistent with past practice;

 

    enter into, renew or extend any agreements restricting the ability to engage or compete in any line of business or geographic area;

 

    adopt or implement a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization;

 

    adjust, reclassify, combine, split or subdivide, or redeem, purchase or otherwise acquire, directly or indirectly, any of Cameron’s capital stock or purchase any of Schlumberger’s capital stock;

 

    take any action that would, or would reasonably be expected to, result in the failure of certain conditions to the merger or prevent, materially delay or materially impede the merger;

 

    take any action that would reasonably be expected to delay materially or adversely affect the ability to obtain any consent, authorization, order or approval of any governmental entity or the expiration of any waiting period under antitrust laws; or

 

    agree or commit to do any of the foregoing.

 

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Unless Cameron otherwise consents in writing (which consent may not be unreasonably withheld, conditioned or delayed), or as otherwise contemplated by the merger agreement or required by law, prior to the effective time of the merger, Schlumberger US, Merger Sub and Schlumberger have agreed to conduct their business in the ordinary course and the merger agreement places specific restrictions on the ability of Schlumberger US, Merger Sub, Schlumberger and their respective subsidiaries to, among other things:

 

    adopt any change in, or waive any provision of, Schlumberger’s organizational documents;

 

    acquire any equity or assets where an antitrust filing would be required and would reasonably be expected to prevent or materially delay the consummation of the merger by the termination date;

 

    adjust, reclassify, split, combine, subdivide or redeem any shares of Schlumberger capital stock or adopt or implement a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization, except as would not disproportionately adversely affect a holder of Cameron common stock relative to a holder of Schlumberger common stock or delay or impede the merger;

 

    declare or pay any dividend or other distribution except for (1) regular quarterly cash dividends with declaration, record and payment dates reasonably consistent with Schlumberger’s past practice or (2) dividends of equity interests or property for which an adjustment to the merger consideration has been effected;

 

    take any action that would, or would reasonably be expected to, result in the failure of any condition to the transaction, or prevent, materially delay or materially impede the merger;

 

    take any action that would reasonably be expected to delay materially or adversely affect the ability to obtain any consent, authorization, order or approval of any governmental entity or the expiration of any waiting period under antitrust laws; or

 

    agree or commit to do any of the foregoing.

Certain Additional Agreements

Stockholders Meeting. Unless the merger agreement is earlier terminated, the Cameron board of directors must submit the merger agreement for approval at the special meeting, even if it changes its recommendation with regard to the merger agreement. Once the special meeting has been called and noticed, Cameron will not be permitted to postpone or adjourn the special meeting without the consent of Schlumberger (which consent may not be unreasonably withheld or delayed), other than to the extent necessary (1) for the absence of a quorum or (2) to allow reasonable additional time for the filing and mailing of any supplemental or amended disclosure that the Cameron board of directors has determined to be necessary.

No Solicitation; Recommendation. Cameron and its subsidiaries will not, and Cameron will use its reasonable best efforts to cause its and its subsidiaries’ officers, directors, employees, investment bankers, consultants, attorneys, accountants, advisors, agents and other representatives not to, directly or indirectly:

 

    solicit, initiate, knowingly encourage or knowingly facilitate any acquisition proposal (as defined below) or any inquiry with respect to an acquisition proposal or engage in, continue or otherwise participate in discussions or negotiations with any person with respect thereto;

 

    furnish any non-public information relating to Cameron or any of its subsidiaries or afford access to the properties, books or records of Cameron or any of its subsidiaries to any person that has made an acquisition proposal or, to the knowledge of Cameron, is considering making an acquisition proposal;

 

    approve or recommend, or propose to approve or recommend, or execute or enter into any letter of intent, agreement in principle, merger agreement or other agreement relating to an acquisition proposal; or

 

    propose publicly or agree to do anything described in the preceding three bullets.

 

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In the event Cameron receives an acquisition proposal, or any request for nonpublic information relating to Cameron or any of its subsidiaries or for access to their properties, books or records by any person that has made or, to the knowledge of Cameron, would reasonably be expected to make, an acquisition proposal, Cameron will promptly (and in no event later than 24 hours after receipt of any acquisition proposal or request) notify Schlumberger of the identity of the person making the acquisition proposal or request and of its material terms and keep Schlumberger reasonably and promptly informed of the status and material terms of the acquisition proposal or request.

The term “acquisition proposal” means any bona fide written offer or proposal for, or any bona fide written indication of interest in, any (1) direct or indirect acquisition or purchase of any business or assets of Cameron or any of its subsidiaries that, individually or in the aggregate, constitutes 33% or more of the net revenues, net income or assets of Cameron and its subsidiaries, taken as a whole, (2) direct or indirect acquisition or purchase of 33% or more of any class of equity securities of Cameron, (3) tender offer or exchange offer that, if consummated, would result in any person beneficially owning 33% or more of any class of equity securities of Cameron, or (4) merger, consolidation, business combination, joint venture, partnership, recapitalization, liquidation, dissolution or similar transaction involving Cameron or any of its subsidiaries whose business constitutes 33% or more of the net revenue, net income or assets of Cameron and its subsidiaries, taken as a whole.

Prior to Cameron’s stockholders approving the proposal to adopt the merger agreement, however, Cameron or its representatives may (1) contact any person making an acquisition proposal to clarify the terms and conditions thereof or to inform such person that any acquisition proposal made orally can only be considered if made in writing, (2) furnish information and access, but only in response to a written request, to any person making an acquisition proposal that was not solicited, initiated, knowingly encouraged or knowingly facilitated by Cameron or any of its subsidiaries, affiliates or representatives on or after August 25, 2015 and (3) participate in discussions and negotiate with such person concerning an unsolicited acquisition proposal, in the case of (2) and (3) if:

 

    Cameron has not breached the non-solicitation provisions of the merger agreement with respect to the acquisition proposal in any material respect;

 

    the Cameron board of directors concludes in good faith (after receipt of advice of a financial advisor of nationally recognized reputation and outside legal counsel) that such acquisition proposal is reasonably likely to result in a superior proposal (as defined below); and

 

    Cameron receives from such person an executed confidentiality agreement the material provisions of which, as they relate to confidentiality, are in all material respects no less favorable in the aggregate to Cameron and no less restrictive in the aggregate to such person as those contained in the confidentiality agreement between Cameron and Schlumberger. Any such confidentiality agreement is not required to include explicit or implicit standstill restrictions or otherwise restrict the making of or amendment or modification to any acquisition proposal.

In addition, the Cameron board of directors may not effect a change in recommendation (as defined below) unless the change occurs before stockholder approval of the merger and only if:

 

    the Cameron board of directors determines in good faith (after consultation with its outside legal counsel) that failure to make a change in recommendation would be inconsistent with the directors’ fiduciary duties to Cameron stockholders under applicable law; and

 

    before taking any such action, Cameron gives Schlumberger three business days’ written notice.

The term “superior proposal” means any bona fide written acquisition proposal for or in respect of at least a majority of the outstanding shares of Cameron common stock or all or substantially all of Cameron’s and its subsidiaries’ assets (1) on terms that the Cameron board of directors determines in its good faith judgment (after consultation with a financial advisor of nationally recognized reputation and outside legal counsel) are more

 

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favorable to Cameron and its stockholders than the merger and (2) that constitutes a transaction that is reasonably likely to be consummated on the terms so proposed, taking into account all legal, financial, regulatory and other aspects of such proposal.

A “change in recommendation” would occur if the Cameron board of directors fails to make, withdraws, modifies or qualifies, or proposes publicly to withhold, withdraw, modify or qualify, in any manner adverse to Schlumberger or its affiliates, the merger, approval of the merger agreement or the Cameron board of directors’ recommendation to Cameron stockholders in favor of adoption of the merger agreement, or approves, endorses, or recommends, or publicly proposes to approve, endorse or recommend, any acquisition proposal.

Indemnification. From and after the effective time of the merger, the surviving corporation will (1) indemnify each director, officer or employee of Cameron or its subsidiaries against all expenses and liability reasonably incurred as a result of such person’s service to Cameron or its subsidiaries, to the fullest extent permitted by law, and (2) advance expenses incurred to the same extent.

At or prior to the effective time of the merger, Cameron may purchase a tail directors’ and officers’ liability insurance policy for at least six years after the effective time of the merger. If Cameron does not purchase such a policy, then for a period of six years after the effective time of the merger, the surviving corporation will maintain directors’ and officers’ liability insurance policies with terms substantially no less advantageous to the indemnified parties than Cameron’s existing policies. The surviving corporation will not be required to spend more than 300% of what Cameron currently spends to maintain current insurance coverage.

Filings. Each of Schlumberger and Cameron has agreed to (and cause each of their respective subsidiaries to):

 

    make its respective required filings (and filings reasonably determined by Schlumberger after consultation with Cameron to be advisable) under the HSR Act, the EC Merger Regulation and any other competition laws as promptly as practicable;

 

    use its reasonable best efforts to cooperate with the other party to determine as promptly as practicable which filings are required (or reasonably determined by Schlumberger after consultation with Cameron to be advisable), to be made prior to the effective time of the merger with, and which consents, approvals, permits and authorizations are required to be obtained prior to the effective time of the merger from, any governmental entity, and to timely make such filings;

 

    promptly notify the other party of any communication concerning the merger agreement or the merger from any governmental entity and to consult with and permit the other party to review in advance any proposed communication concerning the merger agreement or the merger to any governmental entity;

 

    not participate or agree to participate in any meeting or substantive discussion with any governmental entity related to any filings or investigation concerning the merger agreement or the merger unless it consults with the other party in advance and invites the other party’s representatives to attend, unless prohibited by the governmental entity;

 

    promptly furnish to the other party draft copies prior to submission, with reasonable time to comment and consult, of all correspondence, filings and communications that it intends to submit to any governmental entity;

 

    promptly furnish to the other party such necessary information and reasonable assistance as such other party may reasonably request in connection with its preparation of necessary filings, registrations or submissions of information to any governmental entity; and

 

    deliver to the other party’s outside counsel complete copies of all documents furnished to any governmental entity as part of any filing.

The parties have also agreed that Schlumberger will be entitled to direct the antitrust defense of the transaction contemplated by the merger agreement or litigation by or negotiations with any governmental entity.

 

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Under the terms of the merger agreement, Schlumberger has the right, but not the obligation, to oppose or refuse to consent, through litigation or otherwise, to any request, attempt or demand by any governmental entity or other person for any divestiture, hold separate condition or any other restriction with respect to any assets, businesses or product lines of Schlumberger, Cameron or any of their respective subsidiaries and has the obligation to defend any litigation instituted by a governmental entity or other person with respect to the legality of the merger under applicable regulatory laws. Schlumberger US, Merger Sub and Schlumberger are required to take all such action necessary to resolve any objections that an antitrust regulator may assert under regulatory laws, and to avoid or eliminate, and minimize the impact of, each impediment under regulatory laws that may be asserted by a governmental entity in order to enable the closing to occur as soon as reasonably possible (and in any event no later than the termination date). However, (1) none of Schlumberger US, Merger Sub, Schlumberger or Cameron or their respective subsidiaries is required to take, or cause to be taken, or agree to take, any action with respect to any of the assets, businesses or product lines of Cameron, Schlumberger, any of their subsidiaries, or any combination thereof, if such action (whether taken with respect to assets of Cameron and its subsidiaries or Schlumberger and its subsidiaries), individually or in the aggregate, would result in the divestiture, sale, hold separate, license or limitation on the conduct of business that, individually or taken together, would reasonably be expected to be material to Cameron and its subsidiaries, taken as a whole and (2) Schlumberger is not required to take or agree to take any action that would result in the divestiture, sale, hold separate, license or limitation of the conduct, in whole or in significant part, of OneSubsea. If the merger has not occurred on or before the termination date due to the failure to obtain regulatory clearances, or if an order, decree or ruling permanently prohibits the merger, the merger agreement may be terminated. Please see “The Merger Agreement—Termination, Amendment and Waiver” for more information.

Employee Matters. After the effective time of the merger, Schlumberger and its subsidiaries will honor all Cameron benefit plans and compensation arrangements and agreements in accordance with their terms as in effect immediately prior to the effective time of the merger. For a period of one year following the effective time of the merger, Schlumberger will provide to each current and former employee of Cameron and its subsidiaries compensation and benefits that are no less favorable, in the aggregate, than the compensation and benefits provided to each such employee immediately prior to the effective time of the merger. For employees that are terminated for reasons other than cause prior to the second anniversary of the effective time of the merger, Schlumberger will provide severance benefits that are in accordance with the applicable severance plans and arrangements of Cameron in effect immediately prior to the effective time of the merger.

For purposes of vesting, eligibility to participate and benefit accrual (other than for purposes of benefit accrual under any defined benefit pension plan or eligibility under a program or retiree welfare plan sponsored by Schlumberger or its subsidiaries) under the employee benefit plans of Schlumberger and its subsidiaries, Cameron employees will be credited with their years of service with Cameron and its subsidiaries and predecessors prior to the effective time of the merger to the same extent the Cameron employee was entitled to such credited service prior to the effective time of the merger under the corresponding Cameron plans. Cameron employees will be eligible to participate in the employee benefit plans of Schlumberger and its subsidiaries for which they are otherwise made eligible and that are comparable to a Cameron benefit plan the employee participated in prior to the first effective time of the merger without any waiting time, and to the extent such employee benefit plans provide medical, dental, pharmaceutical and/or vision benefits, without any pre-existing condition exclusions or actively-at-work requirements, except to the extent such exclusion or requirement applied in the applicable Cameron plan. Cameron employees will receive credit for amounts paid under the Cameron medical plans in the year in which the merger occurs for satisfying deductibles, coinsurance and maximum out of pocket requirements under the surviving corporation’s plans.

Schlumberger and Cameron acknowledge that a change in control will occur for purposes of Cameron’s benefit plans at the time of the merger.

In the event the effective time of the merger occurs in 2015, Cameron will pay short-term incentive bonuses for fiscal year 2015 immediately prior to the effective time of the merger based on (1) actual performance for each applicable performance metric as of the latest practicable date prior to the effective time of the merger and

 

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(2) Cameron’s reasonable good faith estimate of expected performance for each applicable performance metric for the remainder of such performance period. In the event the effective time of the merger occurs in the first quarter of 2016, Schlumberger will pay short-term incentive bonuses for 2016 at the time Schlumberger pays bonuses in the ordinary course, with performance based on metrics established by Schlumberger and applicable to the full year. In the event the effective time of the merger occurs after the first quarter of 2016, Schlumberger will pay short-term incentive bonuses for 2016 at the time Schlumberger pays bonuses in the ordinary course, with the amount determined based on (A) a pro rata target bonus for the portion of the year prior to the effective time of the merger and (B) metrics established by Schlumberger for the portion of the year following the effective time of the merger.

From and after September 2015, Cameron may make its ordinary course equity compensation awards in a manner consistent with past practices, except that employees who typically receive stock options as a form of annual long-term incentive award will receive 70% of the value of their long-term incentive awards in the form of time-based restricted stock units and 30% of the value of their long-term incentive awards in the form of stock options. All other Cameron employees that have traditionally received long-term equity incentive awards will receive time-based restricted stock units consistent with past practice.

For purposes of Cameron equity awards to be made from and after September 2015, other than awards made to Mr. Rowe and certain key employees identified as “transitional employees” (which includes Messrs. Lemmer and Sledge, as well as Cameron’s Chief Accounting Officer, Chief Administrative Officer, Corporate Secretary, Chief Compliance Officer and Treasurer), the awards will immediately vest upon a termination in connection with the transaction either without cause or resignation for “modified good reason.” For transitional employees, for the first six months following the effective time, accelerated vesting will be limited to a termination without cause or a resignation for modified good reason and, following such period, accelerated vesting will be available to the transitional employees on a resignation as a result of “standard good reason.” In addition, Cameron may make its long-term incentive awards to specified key employees, who are not named executive officers, with a two-year vesting schedule, rather than its customary three-year vesting schedule. For purposes of the post-signing equity grants, “Modified good reason” includes (1) a major demotion or major reduction in job responsibilities, which for the avoidance of doubt, will not include changes in duties or reporting responsibilities resulting from Cameron ceasing to be a separate publicly traded company or becoming an indirect subsidiary of Schlumberger, (2) a major decrease in aggregate compensation opportunities for a fiscal year or (3) the relocation of an employee’s principal place of employment to a location 50 miles further from the employee’s principal residence. “Standard good reason” will have the same meaning as good reason in Cameron’s standard form restricted stock unit agreement or stock option agreement, as applicable, or, in the case of certain executive officers with a change-in-control agreement, the definition of good reason in such agreement. For purposes of these awards, upon a resignation for modified good reason, then such executive officer will be subject to a one-year noncompetition clause in a form reasonably acceptable to Schlumberger and customary and appropriate for the industry in which Cameron and Schlumberger operate. Awards made to Mr. Rowe from and after September 2015 will be fully vested on any termination following the consummation of the transaction. Option awards that are accelerated as described above will remain exercisable for their full 10-year term.

Schlumberger and Cameron have agreed that Cameron may grant retention bonuses and other awards or payments to Cameron employees, including executive officers, in consultation with Schlumberger. Awards would be payable in cash subject to the terms and conditions agreed upon by Schlumberger and Cameron. The parties have agreed that the aggregate amount of such benefits will not exceed $50 million. Retention payments of approximately $1.95 million have been allocated to certain executive officers (none of whom is a named executive officer) as of the date of this proxy statement/prospectus.

Reasonable Best Efforts. Schlumberger and Cameron have agreed to use their reasonable best efforts to take all actions and to assist and cooperate to consummate the merger as promptly as practicable, including the obtaining of authorizations, clearances, consents and approvals from governmental entities or third parties, the defending of lawsuits challenging the merger, and the execution and delivery of additional instruments necessary to consummate the merger.

 

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Listing Application. Schlumberger will use its reasonable best efforts to cause the shares of Schlumberger common stock to be issued in the merger and to be reserved for issuance upon the exercise or vesting, as applicable, of each converted equity award to be approved for listing on the NYSE, subject to official notice of issuance, prior to the effective time of the merger.

Inspection. Until the effective time of the merger, each party to the transaction has agreed to allow designated officers, attorneys, accountants and other representatives of the other party access to the records and files, correspondence, audits and properties, as well as to all information relating to commitments, contracts, titles and financial position, or otherwise pertaining to its business and affairs.

Publicity. Schlumberger and Cameron have agreed to consult with each other before issuing any press release or public statement with respect to the merger. In addition, neither Schlumberger nor Cameron will issue any press release or otherwise make any public statement or disclosure concerning the other party or the other party’s business, financial condition or results of operations without the consent of the other party (not to be unreasonably withheld or delayed).

Stockholder Litigation. Cameron has agreed to give Schlumberger the opportunity to participate in the defense or settlement of any stockholder litigation against Cameron and/or its directors or officers relating to the transactions contemplated by the merger agreement. Cameron has further agreed that it will not settle or offer to settle any litigation against Cameron or any of its directors or officers by any stockholder of Cameron relating to the merger without the prior written consent of Schlumberger (not to be unreasonably withheld, conditioned or delayed).

Conditions to the Merger

The respective obligations of each party to effect the merger will be subject to the fulfillment of the following conditions on or prior to the closing date:

 

    the approval of the proposal to adopt the merger agreement by Cameron’s stockholders;

 

    the termination or expiration of any waiting period under the HSR Act and the issuance by the European Commission of a decision under the EC Merger Regulation declaring the merger compatible with the common market;

 

    the expiration, lapse or termination of all applicable waiting or other time periods under antitrust laws in other specified jurisdictions, except as would not reasonably be expected to have a material adverse effect;

 

    the absence of any judgment, injunction, order or decree of any governmental authority in the United States, the European Union or other specified jurisdictions prohibiting or enjoining the consummation of the merger;

 

    the effectiveness of the registration statement of which this proxy statement/prospectus is a part, and the absence of any stop order or proceeding seeking a stop order relating to such effectiveness; and

 

    the approval for listing on the NYSE of the Schlumberger common stock to be issued pursuant to the merger.

Additional Conditions to the Obligations of Cameron. Unless waived by Cameron, the obligation of Cameron to effect the merger is subject to the satisfaction on or prior to the closing date of the following additional conditions:

 

    performance in all material respects by each of Schlumberger US, Merger Sub and Schlumberger of its respective covenants and agreements required to be performed by it under the merger agreement at or prior to the closing date;

 

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    certain representations and warranties of Schlumberger US, Merger Sub and Schlumberger contained in the merger agreement being true and correct in all material respects, as of the date of the merger agreement and as of the closing date;

 

    other representations and warranties of Schlumberger US, Merger Sub and Schlumberger contained in the merger agreement being true and correct as of the date of the merger agreement and as of the closing date, except where the failure of such representations to be so true and correct has not had or would not reasonably be expected to have, individually or in the aggregate, a material adverse effect; and

 

    receipt by Cameron of a certificate signed on behalf of Schlumberger, executed on its behalf by an executive officer, certifying to the effect that the conditions specified in the preceding three bullets have been satisfied.

Additional Conditions to the Obligations of Schlumberger. Unless waived by Schlumberger, the obligations of Schlumberger US, Merger Sub and Schlumberger to effect the merger are subject to the satisfaction on or prior to the closing date of the following additional conditions:

 

    performance in all material respects by Cameron of all of its covenants and agreements required to be performed by it under the merger agreement at or prior to the closing date;

 

    certain representations and warranties of Cameron contained in the merger agreement being true and correct in all material respects, as of the date of the merger agreement and as of the closing date;

 

    other representations and warranties of Cameron contained in the merger agreement being true and correct as of the date of the merger agreement and as of the closing date, except where the failure of such representations to be so true and correct has not had or would not reasonably be expected to have, individually or in the aggregate, a material adverse effect; and

 

    receipt by Schlumberger of a certificate of Cameron, executed on its behalf by an executive officer, certifying to the effect that the conditions specified in the preceding three bullets have been satisfied.

Termination, Amendment and Waiver

Termination. The merger agreement may be terminated at any time prior to the effective time of the merger, notwithstanding the adoption of the merger agreement by Cameron’s stockholders (except as described below):

 

    by mutual written agreement of Schlumberger US, Schlumberger and Cameron;

 

    by either Schlumberger or Cameron if:

 

    the merger has not occurred on or before the “termination date,” August 25, 2016, which termination date may, if certain other conditions are satisfied and at the option of either Schlumberger or Cameron, be extended to a date not later than November 25, 2016; however, neither party may terminate the merger agreement under this provision if that party’s breach of any provision of the merger agreement has been the cause of, or resulted in, the failure of the merger to occur on or before the termination date;

 

    the Cameron stockholders do not approve the proposal to adopt the merger agreement at the special meeting or any adjournment or postponement of the special meeting; or

 

    a court of competent jurisdiction in the United States, the European Union or other specified jurisdictions has issued a final, nonappealable order, decree or ruling permanently restraining, enjoining or otherwise prohibiting the merger;

 

    by Cameron if:

 

   

Schlumberger US or Schlumberger is in breach of the merger agreement such that the conditions to the merger set forth in the merger agreement would not be satisfied and such breach is not

 

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curable prior to the termination date; provided that Cameron will have no right to terminate the merger agreement under this provision if Cameron is then similarly in breach of the merger agreement; or

 

    Cameron has received an acquisition proposal that Cameron’s board of directors determines in good faith to be a superior proposal and, after giving Schlumberger at least three business days’ notice of its intent to terminate the agreement (and at least two business days’ notice following any change to the financial terms of such proposal), resolves to accept such proposal and pay the termination fee described below (Cameron may not terminate the merger agreement pursuant to this provision following the approval of the proposal to adopt the merger agreement by Cameron’s stockholders); or

 

    by Schlumberger if:

 

    Cameron is in breach of the merger agreement such that the conditions to the merger set forth in the merger agreement would not be satisfied and such breach is not curable prior to the termination date; provided that Schlumberger will have no right to terminate the merger agreement under this provision if Schlumberger is then similarly in breach of the merger agreement; or

 

    the Cameron board of directors fails to recommend the merger to Cameron stockholders or withdraws, modifies or qualifies (or publicly proposes to do any of the foregoing) its recommendation.

Fees and Expenses. The merger agreement provides for the payment of a termination fee by Cameron to Schlumberger US if the agreement is terminated in specified circumstances. Cameron will be obligated to pay Schlumberger US a $321 million termination fee (net of any expense reimbursement as described below) if:

 

    either party terminates the merger agreement because Cameron’s stockholder approval of the proposal to adopt the merger agreement is not obtained and:

 

    prior to such time there is a publicly announced or disclosed acquisition proposal by another bidder that has not been withdrawn, and

 

    within one year after the date of termination, Cameron enters into a definitive agreement with respect to, or consummates, an acquisition proposal;

 

    Cameron terminates the merger agreement in order to enter into an agreement providing for a superior proposal; or

 

    Schlumberger terminates the merger agreement because the Cameron board of directors fails to recommend its approval of the merger or withdraws, modifies or qualifies (or publicly proposes to do any of the foregoing) its recommendation.

The merger agreement provides that all expenses incurred by the parties will be borne by the party that has incurred such expenses; however, Cameron will be required to reimburse Schlumberger US and Schlumberger for their expenses of up to $10 million if:

 

    the agreement is terminated because Cameron’s stockholders do not approve the proposal to adopt the merger agreement at the special meeting or any adjournment or postponement of the special meeting, and no termination fee is yet payable by Cameron, or

 

    the merger agreement is terminated by Schlumberger because Cameron has willfully and materially breached the merger agreement.

If the merger agreement is terminated by Cameron because Schlumberger US or Schlumberger has willfully and materially breached the merger agreement, then Schlumberger US will reimburse Cameron for its expenses of up to $10 million.

 

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Specific Performance. The parties have agreed in the merger agreement that irreparable damage, for which monetary relief, even if available, would not be an adequate remedy, would occur in the event that any of the provisions of the merger agreement were not performed in accordance with its specific terms or were otherwise breached. The parties have agreed that they will be entitled to seek an injunction or injunctions to prevent breaches of the merger agreement and to enforce specifically the terms and provisions of the merger agreement without proof of damages. The parties have further agreed not to assert that a remedy of specific enforcement is unenforceable or contrary to law, and not to assert that a remedy of monetary damages would provide an adequate remedy or that there is otherwise an adequate remedy at law.

Amendment. The merger agreement may be amended in writing at any time by action of the parties’ respective boards of directors. However, if the proposal to adopt the merger agreement has been approved by Cameron’s stockholders, then no amendment can be made that by law requires the further approval of stockholders without receipt of such further approval.

Waiver. At any time prior to the effective time of the merger, each of Schlumberger and Cameron may:

 

    extend the time for the performance of any obligations of the other party;

 

    waive any inaccuracies in the representations and warranties of the other party; and

 

    waive compliance with any agreement or condition for the benefit of that party.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The unaudited pro forma condensed combined statements of income for the nine months ended September 30, 2015 and for the year ended December 31, 2014 combine the historical consolidated statements of income of Schlumberger and Cameron, giving effect to the merger as if it had occurred on January 1, 2014. The unaudited pro forma condensed combined balance sheet as of September 30, 2015 combines the historical condensed consolidated balance sheets of Schlumberger and Cameron, giving effect to the merger as if it had occurred on September 30, 2015. The historical condensed consolidated financial statements have been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma events that are (1) directly attributable to the merger, (2) factually supportable and (3) with respect to the statements of income, expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements. In addition, the unaudited pro forma condensed combined financial statements were based on and should be read in conjunction with the:

 

    separate historical financial statements of Schlumberger as of and for the year ended December 31, 2014 and the related notes included in Schlumberger’s Annual Report on Form 10-K for the year ended December 31, 2014, which is incorporated by reference into this proxy statement/prospectus;

 

    separate historical financial statements of Cameron as of and for the year ended December 31, 2014 and the related notes included in Cameron’s Annual Report on Form 10-K for the year ended December 31, 2014, which is incorporated by reference into this proxy statement/prospectus;

 

    separate historical financial statements of Schlumberger as of and for the nine months ended September 30, 2015 and the related notes included in Schlumberger’s Quarterly Report on Form 10-Q for the period ended September 30, 2015, which is incorporated by reference into this proxy statement/prospectus; and

 

    separate historical financial statements of Cameron as of and for the nine months ended September 30, 2015 and the related notes included in Cameron’s Quarterly Report on Form 10-Q for the period ended September 30, 2015, which is incorporated by reference into this proxy statement/prospectus.

The unaudited pro forma condensed combined financial statements have been presented for informational purposes only. Such pro forma information is not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the merger been completed as of the dates indicated. In addition, the unaudited pro forma condensed combined financial statements do not purport to project the future financial position or operating results of the combined company.

The unaudited pro forma condensed combined financial statements have been prepared using the acquisition method of accounting under U.S. generally accepted accounting principles, and the regulations of the SEC. All material transactions between Schlumberger and Cameron during the periods presented in the unaudited pro forma condensed combined financial statements have been eliminated. Schlumberger will be considered the acquirer in the merger for accounting purposes. The acquisition accounting is dependent upon certain valuations and other studies that have yet to commence or progress to a stage where there is sufficient information for a definitive measurement. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of providing these unaudited pro forma condensed combined financial statements. Differences between these preliminary estimates and the final acquisition accounting will occur, and these differences could have a material impact on the accompanying unaudited pro forma condensed combined financial statements and the combined company’s future results of operations and financial position.

The unaudited pro forma condensed combined financial statements do not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the merger, the costs to integrate the operations of Schlumberger and Cameron, or the costs necessary to achieve any such cost savings, operating synergies or revenue enhancements.

 

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SCHLUMBERGER LIMITED AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of September 30, 2015

(in millions)

 

     Schlumberger     Cameron     Pro Forma
Adjustments
        Pro Forma
Combined
 

ASSETS

          

Current Assets

          

Cash and short-term investments

   $ 6,605      $ 1,948      ($ 2,772 )    (A)   $ 5,781   

Receivables, net

     9,372        2,088            11,460   

Inventories

     4,228        2,659        280      (B)     7,167   

Other current assets

     1,327        481            1,808   
  

 

 

   

 

 

   

 

 

     

 

 

 
     21,532        7,176        (2,492       26,216   

Fixed Income Investments, held to maturity

     439        —              439   

Investments in Affiliated Companies

     3,359        —          (2,030   (C)     1,329   

Fixed Assets less accumulated depreciation

     14,554        1,733        96      (D)     16,383   

Multiclient Seismic Data

     966        —              966   

Goodwill

     15,610        1,796        (1,796   (E)     23,921   
         8,311      (F)  

Intangible assets

     4,524        613        (613   (G)     11,284   
         6,760      (H)  

Other Assets

     2,358        291            2,649   
  

 

 

   

 

 

   

 

 

     

 

 

 
   $ 63,342      $ 11,609      $ 8,236        $ 83,187   
  

 

 

   

 

 

   

 

 

     

 

 

 

LIABILITIES AND EQUITY

          

Current Liabilities

          

Accounts payable and accrued liabilities

   $ 7,186      $ 2,786      $ 100      (I)   $ 10,072   

Estimated liability for taxes on income

     1,425       342            1,767   

Short-term borrowings and current portion of long-term debt

     4,761        38            4,799   

Dividends payable

     638        —              638   
  

 

 

   

 

 

   

 

 

     

 

 

 
     14,010        3,166        100          17,276   

Long-term Debt

     7,487        2,794        229      (J)     10,510   

Postretirement Benefits

     1,282        76            1,358   

Deferred Taxes

     1,276        227        (201 )    (K)     3,734   
         2,417      (L)  
         15      (M)  

Other Liabilities

     1,108        86            1,194   
  

 

 

   

 

 

   

 

 

     

 

 

 
     25,163        6,349        2,560          34,072   
  

 

 

   

 

 

   

 

 

     

 

 

 

Equity

          

Common stock

     12,642        3,256        (3,256 )   (N)     23,408   
         10,766      (O)  

Treasury stock

     (13,023     (3,987     3,987      (N)     (13,023

Retained earnings

     42,515        6,007        (6,007   (N)     42,630   
         (100 )    (I)  
         215      (M)  

Accumulated other comprehensive loss

     (4,193     (847     847      (N)     (4,193
  

 

 

   

 

 

   

 

 

     

 

 

 

Schlumberger/Cameron stockholders’ equity

     37,941        4,429        6,452          48,822   

Noncontrolling interests

     238        831        (776 )    (P)     293   
  

 

 

   

 

 

   

 

 

     

 

 

 
     38,179        5,260        5,676          49,115   
  

 

 

   

 

 

   

 

 

     

 

 

 
   $ 63,342      $ 11,609      $ 8,236        $ 83,187   
  

 

 

   

 

 

   

 

 

     

 

 

 

The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.

 

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SCHLUMBERGER LIMITED AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

For the nine months ended September 30, 2015

(in millions, except per share amounts)

 

                          Pro Forma
Adjustments
        Pro Forma
Combined
     
    Schlumberger     Cameron     Reclassifications     (AA)        

Revenue

  $ 27,731      $ 6,703              $ 34,434     

Interest and other income

    155              5      (BB)     160     

Expenses

               

Cost of revenue

    22,028        4,987        650          (38   (CC)     27,875     
            242      (DD)    
            6      (EE)    

Research & engineering

    819          97              916     

General & administrative

    362          74              436     

Selling & administrative

    —          821        (821           —       

Restructuring & other

    439        658                1,097     

Interest

    254        105            (27 )    (FF)     332     
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

Income from continuing operations before taxes

    3,984        132        —            (178       3,938     

Taxes on income

    859        144            (64 )    (GG)     939     
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

Income from continuing operations

    3,125        (12     —            (114       2,999     

Income attributable to noncontrolling interests

    (37     (43         38      (BB)     (42  
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

Income from continuing operations attributable to Schlumberger/Cameron

  $ 3,088      ($ 55     —          ($ 76     $ 2,957     
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

Income from continuing operations per share attributable to Schlumberger/Cameron:

               

Basic earnings per share

  $ 2.43      $ (0.29           $ 2.10     

Diluted earnings per share

  $ 2.42      $ (0.29           $ 2.09     

Average shares outstanding:

               

Basic

    1,270        192            (55       1,407      (HH)

Assuming dilution

    1,278        192            (55       1,415      (HH)

The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.

 

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SCHLUMBERGER LIMITED AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

For the year ended December 31, 2014

(in millions, except per share amounts)

 

    Schlumberger     Cameron     Reclassifications      (AA)   Pro Forma
Adjustments
        Pro Forma
Combined
       

Revenue

  $ 48,580     $ 10,381             $ 58,961     

Interest and other income

    291              (16   (BB)     275     

Expenses

               

Cost of revenue

    37,398        7,812        1,014          (54   (CC)     46,500     
            322      (DD)    
            8      (EE)    

Research & engineering

    1,217          128              1,345     

General & administrative

    475          145              620     

Impairments & other

    1,773        73                1,846     

Selling & administrative

    —          1,287        (1,287           —       

Interest

    369        129            (36   (FF)     462     
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

Income from continuing operations before taxes

    7,639        1,080        —            (256       8,463     

Taxes on income

    1,928        258            (84   (GG)     2,102     
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

Income from continuing operations

    5,711        822        —            (172       6,361     

Income attributable to noncontrolling interests

    (68     (37         31      (BB)     (74  
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

Income from continuing operations attributable to Schlumberger/Cameron

  $ 5,643      $ 785                  ($ 141 )      $ 6,287     
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

   

Income from continuing operations per share attributable to Schlumberger/Cameron:

               

Basic earnings per share

  $ 4.36      $ 3.85              $ 4.39     

Diluted earnings per share

  $ 4.31      $ 3.83              $ 4.35     

Average shares outstanding:

               

Basic

    1,295        204            (67       1,432        (HH ) 

Assuming dilution

    1,308        205            (68 )       1,445        (HH ) 

The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.

 

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Note 1: Description of Transaction

On August 25, 2015, Schlumberger and Cameron entered into a merger agreement pursuant to which Cameron will become a wholly-owned subsidiary of Schlumberger, subject to the terms and conditions set forth in the merger agreement. At the effective time of the merger, each share of Cameron common stock issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive 0.716 shares of Schlumberger common stock and $14.44 in cash, with cash paid in lieu of fractional shares.

At the effective time of the merger:

 

    Each outstanding option to purchase Cameron common stock will be converted by adjusting the exercise price and number of shares subject to the option using the equity award exchange ratio described in the merger agreement into a stock option to acquire shares of Schlumberger common stock, and such options will continue to vest and become exercisable for Schlumberger common stock according to their original terms. The fair value of the adjusted options, whether vested or unvested, will be recorded as part of the purchase consideration transferred to the extent that pre-acquisition services have been rendered. The remainder of the fair value of the unvested options will be recorded as compensation expense over the future vesting period in the periods following the merger completion date.

 

    Each outstanding Cameron restricted stock unit will be converted, based upon the equity award exchange ratio described in the merger agreement, into a right to receive a restricted stock unit of Schlumberger common stock. The fair value of the adjusted restricted stock unit will be recorded as part of the purchase consideration transferred to the extent that pre-acquisition services have been rendered. The remainder of the fair value of the restricted stock units will be recorded as compensation expense over the future vesting period in the periods following the merger completion date.

 

    Each outstanding Cameron deferred stock unit award will be cancelled and converted into the right to receive 0.716 shares of Schlumberger common stock and $14.44 in cash, with cash paid in lieu of fractional shares.

 

    Each outstanding Cameron performance share award will be evaluated pursuant to its performance criteria as adjusted in accordance with the merger agreement and converted, based upon the equity award exchange ratio described in the merger agreement, into a right to receive a vested Schlumberger deferred stock unit with a payment schedule as set forth in the original Cameron performance share award.

Note 2: Basis of Presentation

The merger is reflected in the unaudited pro forma condensed combined financial statements pursuant to the acquisition method of accounting. Under the acquisition method, the total estimated purchase price as described in Note 3 will be measured at the closing date of the merger using the market price of Schlumberger common stock at that time plus the cash consideration. This may result in a merger consideration value that is different from that assumed for purposes of preparing these unaudited pro forma condensed combined financial statements. The assets and liabilities of Cameron have been measured at fair value based on various preliminary estimates using assumptions that Schlumberger management believes are reasonable utilizing information currently available. Use of different estimates and assumptions could yield materially different results. There are limitations on the type of information that can be exchanged between Schlumberger and Cameron at this time. As such until the merger is complete, Schlumberger will not have complete access to all relevant information.

The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions, including estimating future cash flows. The excess of the purchase price over the estimated amounts of identifiable assets and liabilities of Cameron as of the effective date of the merger will be allocated to goodwill. The purchase price allocation is subject to finalization of Schlumberger’s

 

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analysis of the fair value of the assets and liabilities of Cameron as of the effective date of the merger. Accordingly, the purchase price allocation in the unaudited pro forma condensed combined financial statements is preliminary and will be adjusted upon completion of the final analysis of the fair value of the assets and liabilities of Cameron. Such adjustments could be material.

In accordance with the SEC’s rules and regulations, the unaudited pro forma condensed combined financial statements do not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the merger or the costs to integrate the operations of Schlumberger and Cameron or the costs necessary to achieve any such cost savings, operating synergies or revenue enhancements.

Upon completion of the merger, Schlumberger will perform a detailed review of Cameron’s accounting policies. As a result of that review, Schlumberger may identify differences between the accounting policies of the two companies that, when conformed, could have a material impact on the consolidated financial statements of the combined company.

Certain reclassifications have been made to Cameron’s historical financial statements to conform to the presentation used in the unaudited pro forma condensed combined statement of income. Upon completion of the merger, further review of Cameron’s financial statements may result in additional revisions to Cameron’s historical presentation to conform to Schlumberger’s presentation.

Note 3: Estimate of Consideration Expected to be Transferred

The following is a preliminary estimate of the consideration expected to be transferred to effect the acquisition of Cameron.

 

(stated in millions, except exchange ratio and per share amounts)              

Equity consideration:

     

Number of shares of Cameron common stock outstanding as of September 30, 2015

     191      

Number of Cameron deferred stock units and performance share awards outstanding as of September 30, 2015

     1      
  

 

 

    
     192      

Multiplied by the exchange ratio

     0.716      
  

 

 

    

Schlumberger shares of common stock to be issued in connection with the merger

     137      

Schlumberger common stock share price on November 9, 2015

   $ 77.91      
  

 

 

    

Common stock equity consideration

      $ 10,674   

Cash consideration:

     

Number of shares of Cameron common stock outstanding as of September 30, 2015

     191      

Number of Cameron deferred stock units and performance share awards outstanding as of September 30, 2015

     1      
  

 

 

    
     192      

Cash consideration per Cameron share

   $ 14.44      
  

 

 

    
        2,772   

Other:

     

Fair value of Schlumberger equivalent stock options and restricted stock units to be issued that relates to pre-merger services(a)

        92   
     

 

 

 

Estimate of consideration expected to be transferred(b)

      $ 13,538   
     

 

 

 

 

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(a) Generally accepted accounting principles require that the fair value of replacement stock option awards attributable to pre-merger services be included in the consideration transferred. The fair value of the Schlumberger equivalent stock options was estimated using the Black-Scholes valuation model with the following assumptions:

 

Stock price

   $77.91

Post-conversion exercise price

   $24.74 - $72.08

Expected volatility

   23%

Dividend yield

   2.65%

Risk-free interest rate

   0.40%

Expected term

   2 years

Black-Scholes weighted average fair value per option

   $19.48

 

(b) The estimated consideration expected to be transferred reflected in these unaudited pro forma condensed combined financial statements does not purport to represent what the actual consideration transferred will be when the merger is completed. The fair value of equity securities issued as part of the consideration transferred is required to be measured on the closing date of the merger at the then-current market price of Schlumberger common stock. This requirement will likely result in an equity component different from what has been assumed in these unaudited pro forma condensed combined financial statements, and that difference may be material.

Assuming a $1.00 change in the market price of Schlumberger’s common stock, the estimated consideration transferred would increase or decrease by approximately $140 million, which would be reflected in these unaudited pro forma condensed combined financial statements as an increase or decrease to goodwill. Furthermore, for every 10% change in the market price of Schlumberger’s common stock, the estimated consideration transferred would increase or decrease by approximately $1.1 billion, which would result in a corresponding increase or decrease in goodwill.

Note 4: Estimate of Assets to be Acquired and Liabilities to be Assumed

The following is a preliminary estimate of the assets to be acquired and the liabilities to be assumed by Schlumberger, reconciled to the estimate of consideration expected to be transferred:

 

           (stated in millions)  

Book value of net assets acquired at September 30, 2015

     $ 5,260   

Less: Cameron noncontrolling interest balance relating to OneSubsea

       (776

Less: Cameron historical goodwill

       (1,796

Less: Cameron historical intangible assets

       (613

Add: Cameron historical deferred tax liabilities relating to intangible assets

       201   

Less: Surviving postcombination noncontrolling interests

       (55
    

 

 

 

Adjusted book value of net assets acquired

     $ 2,221   

Fair value adjustments to:

    

Increase the value of inventory

   $ 280     

Increase the value of fixed assets

     96     

Intangible assets

     6,760     

Increase the carrying value of long-term debt

     (229  

Deferred tax liabilities

     (2,432  

Goodwill

     8,311     
  

 

 

   

Total fair value adjustments

       12,786   

Gain on investment in OneSubsea, net of tax

       (215

Other

       (1,254
    

 

 

 

Estimate of consideration expected to be transferred

     $ 13,538   
    

 

 

 

 

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The following is a discussion of the adjustments made to Cameron’s assets and liabilities in connection with the preparation of these unaudited pro forma condensed combined financial statements.

Inventory: The estimated adjustment to write up inventories to fair value is comprised of two components, approximately $210 million for inventories carried on the first-in, first-out (FIFO) method and $70 million for inventories carried on the last-in, last-out (LIFO) method. With regard to the $210 million adjustment to FIFO inventories, cost of revenue will reflect this increased valuation as this inventory is sold. Accordingly, Schlumberger margins will be temporarily reduced in the initial periods subsequent to merger. With regard to the $70 million adjustment to LIFO inventories, such adjustment will only be reflected in cost of revenues when Schlumberger begins to liquidate this new LIFO layer. The impact of both of these inventory adjustments is not reflected in the unaudited pro forma condensed combined statement of income because they will not have a continuing impact.

Fixed Assets: For purposes of these unaudited pro forma condensed combined financial statements, Schlumberger has estimated that the fair value adjustment to write-up fixed assets to fair value will approximate $96 million. This estimate of fair value is preliminary and subject to change once Schlumberger has sufficient information as to the specific types, nature, age, condition and location of Cameron’s fixed assets.

Intangible Assets: The fair value of identifiable intangible assets is determined primarily using the “income approach,” which requires a forecast of all of the expected future cash flows either through the use of the relief-from-royalty method or the multi-period excess earnings method. Some of the more significant assumptions inherent in the development of intangible asset values include: the amount and timing of projected future cash flows, the discount rate selected to measure the risks inherent in the future cash flows, the assessment of the asset’s life cycle and various other factors. For purposes of these unaudited pro forma condensed combined financial statements, using certain high-level assumptions, the fair value of the identifiable intangible assets, their weighted average useful lives and the resulting amortization expense for the periods presented have been estimated as follows:

 

                   Amortization Expense  
     Estimated
Fair Value
     Weighted Average
Estimated
Useful Life
     Year Ended
December 31, 2014
     Nine Months
Ended
September 30, 2015
 
     (in millions)      (in years)      (in millions)      (in millions)  

Customer Relationships

   $ 2,670         20       $ 134       $ 100   

Technology / Technical Know-How

     2,440         20         122         92   

Tradenames / Trademarks

     1,650         25         66         50   
  

 

 

       

 

 

    

 

 

 
   $ 6,760          $ 322       $ 242   
  

 

 

       

 

 

    

 

 

 

These preliminary estimates of fair value and estimated useful life will likely be different from the final acquisition accounting, and the difference could have a material impact on the accompanying unaudited pro forma condensed combined financial statements. A 10% change in the valuation of intangible assets would cause a corresponding increase or decrease in annual amortization expense of approximately $32 million, assuming an overall weighted average useful life of 21 years. Once Schlumberger has full access to the specifics of Cameron’s intangible assets, additional insight will be gained that could impact: (i) the estimated total value assigned to intangible assets and (ii) the estimated weighted average useful life of each category of intangible assets. The estimated intangible asset values and related useful lives could be impacted by a variety of factors that may become known to Schlumberger only upon access to the additional information and/or changes in such factors that may occur prior to the effective time of the merger.

Long-term Debt: The carrying value of Cameron’s long-term debt will be remeasured to its fair value as of the closing of the merger. The ultimate adjustment of the fair value of long-term debt may vary significantly at the merger completion date based on market conditions at that time.

 

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Deferred Tax Liabilities: As of the effective date of the merger, adjustments will be made for deferred taxes as part of the accounting for the acquisition. These adjustments reflect the estimated deferred tax liability impact of the acquisition on the balance sheet, primarily relating to estimated fair value adjustments for acquired inventory, fixed assets, intangible assets and long-term debt. For purposes of these unaudited pro forma condensed combined financial statements, deferred taxes are provided at the 35% U.S. federal statutory income tax rate.

Gain On Investment In OneSubsea: Represents a pro forma adjustment to record Schlumberger’s gain as a result of remeasuring its previously held equity interest in OneSubsea, a joint venture that manufactures and develops products, systems and services for the subsea oil and gas market. OneSubsea is 40% owned by Schlumberger and 60% owned by Cameron. Generally accepted accounting principles require that an acquirer remeasure its previously held equity interest in an acquiree at its acquisition date fair value and recognize the resulting gain or loss in earnings. The gain is calculated based upon the acquisition date fair value of OneSubsea and will be impacted by transactional activity such as equity income and dividends, up until the date the merger is completed. Because this pro forma adjustment will not have a continuing impact, it is excluded from the unaudited pro forma condensed combined statement of income, but is reflected as an adjustment to goodwill and retained earnings in the unaudited pro forma condensed combined balance sheet.

Goodwill: Goodwill is calculated as the difference between the acquisition date fair value of the consideration expected to be transferred and the values assigned to the identifiable assets acquired and liabilities assumed. Goodwill is not amortized, but rather is subject to impairment testing on at least an annual basis.

Other: Represents the basis difference between Cameron’s noncontrolling interest balance relating to OneSubsea and Schlumberger’s equity investment in OneSubsea. This is a result of Schlumberger and Cameron each being required to apply different accounting in connection with the initial formation of OneSubsea, as required by generally accepted accounting principles.

Note 5: Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet

 

(A) To reflect the cash portion of the merger consideration that is payable by Schlumberger to the stockholders of Cameron.

 

(B) To adjust acquired inventory to its estimated fair value. Schlumberger’s cost of revenue will reflect the increased valuation of Cameron’s inventory as the acquired inventory is sold. This adjustment does not have a continuing impact on the combined operating results and as such, it is not included in the unaudited pro forma condensed combined statement of income. See Note 4 for further details.

 

(C) To eliminate Schlumberger’s investment in OneSubsea.

 

(D) To adjust for the estimated differences between the carrying value and fair value of Cameron’s fixed assets. See Note 4 for further details.

 

(E) To eliminate Cameron’s historical goodwill.

 

(F) To record the estimated goodwill created as a result of this transaction. See Note 4 for detailed calculation.

 

(G) To eliminate Cameron’s historical intangible assets.

 

(H) To record the estimated fair value of identifiable intangible assets. See Note 4 for further details.

 

(I) Reflects an estimate of Schlumberger’s merger-related transaction costs, including advisory and legal fees as well as amounts relating to employee benefits such as change in control payments. These amounts will be expensed as incurred and are not reflected in the unaudited pro forma condensed combined statement of income because they will not have a continuing impact. No adjustment has been made for merger-related costs to be incurred by Cameron.

 

(J) Reflects an adjustment to increase the carrying value of Cameron’s long-term debt to its estimated fair value.

 

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(K) Represents an adjustment to eliminate deferred tax liabilities associated with Cameron’s preacquisition intangible assets.

 

(L) Represents the estimated deferred tax liability related to the fair value adjustments made to assets acquired and liabilities assumed, excluding goodwill, as calculated below:

Establish deferred tax liabilities (assets) for the following:

 

     (stated in millions)  

Identified intangible assets

   $ 6,760   

Increase in the basis of inventory

     280   

Increase in the basis of fixed assets

     96   

Increase in the basis of long-term debt

     (229
  

 

 

 
     6,907   

U.S. federal statutory tax rate

     35
  

 

 

 
   $ 2,417   
  

 

 

 

 

(M) Represents the preliminary fair value adjustment associated with Schlumberger’s previously held equity interest in OneSubsea, resulting in an estimated after-tax gain of $215 million, net of deferred taxes of $15 million. Because this adjustment will not have a continuing impact, it is excluded from the unaudited pro forma condensed combined statement of income. See Note 4 for further details.

 

(N) Reflects adjustments to eliminate Cameron’s historical equity balances.

 

(O) To record the fair value of the equity consideration to be issued, as well as the fair value of Schlumberger equivalent stock options and restricted stock units to be issued.

 

(P) To eliminate Cameron’s noncontrolling interest balance relating to the OneSubsea joint venture with Schlumberger.

Note 6: Adjustments to Unaudited Pro Forma Condensed Combined Statements of Income

 

(AA) Certain reclassifications have been made to Cameron’s historical statement of income to conform to Schlumberger’s presentation.

 

(BB) Reflects the elimination of Schlumberger’s equity earnings (loss for the nine months ended September 30, 2015) relating to OneSubsea as well as Cameron’s noncontrolling interest in the net income of the venture, respectively. Schlumberger’s equity earnings/loss relating to its investment in OneSubsea is net of amortization expense relating to intangible assets, which were recorded in connection with its initial investment in OneSubsea, of $44 million and $33 million for the year ended December 31, 2014 and the nine months ended September 30, 2015, respectively.

 

(CC) To eliminate Cameron’s historical intangible asset amortization expense.

 

(DD) Reflects amortization expense associated with intangible assets recorded in this transaction. See Note 4 for further details.

 

(EE) Represents incremental depreciation expense associated with the estimated fair value adjustment related to Cameron’s fixed assets over the estimated remaining useful life of 12 years.

 

(FF) Represents the amortization associated with the fair value adjustment to increase Cameron’s fixed rate long-term debt over the weighted average remaining term of the obligations.

 

(GG) Schlumberger has assumed a 35% tax rate when estimating the tax impacts of the appropriate pro forma adjustments, which represents the U.S. federal statutory tax rate. The effective tax rate of the combined company could be significantly different from what is presented in these unaudited pro forma condensed combined financial statements for a variety of reasons, including post-merger activities.

 

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The tax impact of the pro forma adjustments has been calculated as follows:

 

     (stated in millions)  
     Year Ended
December 31, 2014
    Nine Months Ended
September 30, 2015
 

Elimination of Cameron’s historical amortization expense

   $ (54   $ (38

Amortization expense associated with intangible assets

     322        242   

Depreciation expense relating to fixed asset fair value adjustment

     8        6   

Amortization of debt fair value adjustment

     (36     (27
  

 

 

   

 

 

 

Pro forma incremental expenses

     240        183   

U.S. federal statutory tax rate

     35     35
  

 

 

   

 

 

 

Tax benefit relating to pro forma incremental expenses

   $ 84      $ 64   
  

 

 

   

 

 

 

 

(HH) Represents the adjusted weighted-average shares outstanding calculated as follows:

 

     (stated in millions)  
     Year Ended
December 31, 2014
     Nine Months Ended
September 30, 2015
 
     Basic      Assuming
Dilution
     Basic      Assuming
Dilution
 

Schlumberger weighted-average historical shares outstanding

     1,295         1,308         1,270         1,278   

New Schlumberger shares of common stock to be issued

     137         137         137         137   
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,432         1,445         1,407         1,415   
  

 

 

    

 

 

    

 

 

    

 

 

 

The dilutive effect of Cameron stock options and restricted stock units that will be converted into Schlumberger stock options and restricted stock units is not significant.

 

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COMPARISON OF STOCKHOLDER RIGHTS

As a result of the merger, holders of Cameron common stock will become stockholders of Schlumberger, and the rights of the former stockholders of Cameron will thereafter be governed by Schlumberger’s articles of incorporation and amended and restated by-laws and the Curaçao Civil Code, which we refer to in this discussion as Curaçao law. The rights of Cameron stockholders are currently governed by Cameron’s restated certificate of incorporation and bylaws and the General Corporation Law of the State of Delaware, which we refer to in this discussion as Delaware law.

The following summarizes certain differences between the current rights of Cameron stockholders and the current rights of Schlumberger stockholders. These differences arise in part from the differences between Curaçao law and Delaware law. Additional differences arise from the differences between governing documents of the two companies.

Although it is impracticable to compare all of the aspects in which Curaçao law and Delaware law and Schlumberger’s and Cameron’s governing documents differ with respect to stockholder rights, the following discussion summarizes the material differences between them. This summary is not intended to be a complete statement of the rights of stockholders of the two companies or a complete description of the specific provisions referred to below. The summary is qualified in its entirety by reference to Curaçao law, Delaware law, Schlumberger’s articles of incorporation and amended and restated by-laws and Cameron’s restated certificate of incorporation and bylaws. You are encouraged to carefully read this entire proxy statement/prospectus, the relevant provisions of Curaçao law and Delaware law and the other documents to which Schlumberger and Cameron refer in this proxy statement/prospectus for a more complete understanding of the differences between the rights of a Schlumberger stockholder and the rights of a Cameron stockholder. Schlumberger and Cameron have filed with the Securities and Exchange Commission their respective governing documents referenced in this comparison of shareholder rights. To find out where copies of these documents can be obtained, see the section entitled “Where You Can Find More Information.”

 

    

Cameron Stockholder Rights

  

Schlumberger Stockholder Rights

Authorized Stock

   The authorized capital stock of Cameron consists of (a) 400,000,000 shares of Cameron common stock and (b) 10,000,000 shares of Cameron preferred stock.    Schlumberger may issue (a) 4,500,000,000 shares of Schlumberger common stock and (b) 200,000,000 shares of Schlumberger preferred stock.
   Cameron’s board of directors has the authority to issue shares of preferred stock in one or more classes or series and to fix (a) the designation, (b) voting powers, (c) the preferences and relative, participating, optional or other special rights and (d) the qualifications, limitations or restrictions of any series of preferred stock.    Schlumberger’s board of directors has the authority to issue shares of preferred stock in one or more series and to fix (a) the designations and number of shares, (b) the annual dividend rate on such series (subject to limitations on such rate set forth in Schlumberger’s articles of incorporation), (c) whether such dividends will be paid annually or in installments, (d) any rights of holders of such series to convert their shares into other series of Schlumberger capital stock, (e) any rights of Schlumberger to redeem such shares or of holders to

 

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Cameron Stockholder Rights

  

Schlumberger Stockholder Rights

      require Schlumberger to purchase such shares (and any sinking fund provisions) and (f) other terms that are not inconsistent with Schlumberger’s articles of incorporation and Curaçao law.
   As of the date of this proxy statement/prospectus, there were no shares of Cameron preferred stock outstanding.    As of the date of this proxy statement/prospectus, there were no shares of Schlumberger preferred stock outstanding.

Voting Rights

   Cameron stockholders are entitled to one vote for each share of Cameron common stock they hold.    Each holder of shares of Schlumberger common stock and each holder of shares of Schlumberger preferred stock (if issued and outstanding) is entitled to one vote for each share of common stock or for each share of preferred stock held.

Stockholder Meetings

   Cameron’s bylaws provide that the annual meetings of stockholders may be held at such place, on such date and at such time as the board of directors designates and, pursuant to Delaware law, if an annual stockholder meeting is not held within 13 months of the date of the last annual stockholder meeting, the Delaware Court of Chancery may order a meeting to be held upon application of any stockholder or director.    Schlumberger’s articles of incorporation and Curaçao law provide that all general meetings of Schlumberger stockholders must be held in Curaçao, and a general stockholder meeting is required to be held once a year under Curaçao law.
   Cameron’s restated certificate of incorporation and bylaws provide that special meetings of stockholders may be called only by the Chairman of the board of directors, the President or a majority of the board of directors.    Schlumberger’s articles of incorporation and by-laws provide that special general meetings of Schlumberger stockholders may be called at any time upon the direction of the Chairman of the board of directors, the Vice Chairman of the board of directors, the Chief Executive Officer, the President or the board of directors. Special general meetings of stockholders may also be called by one or more Schlumberger stockholders representing at least 10% of the votes that can be cast on the topics they wish to be addressed at such meeting and that have a reasonable interest in

 

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      having such meeting convened, or by one or more holders of shares representing in the aggregate a majority of shares then outstanding and, in certain circumstances if all of the directors are prevented from or incapable of serving, by any person or persons holding in the aggregate at least 5% of the outstanding shares of Schlumberger common stock for the purpose of electing a board of directors.
Stockholder Action by Written Consent    Cameron’s restated certificate of incorporation specifically denies stockholders the right to act by written consent.    Under Curaçao law, stockholders may adopt resolutions in writing (by written consent) without a meeting, provided that all stockholders and all directors have agreed with this manner of adopting resolutions.

Election of Directors

   Under Cameron’s restated certificate of incorporation, Cameron’s entire board of directors stands for reelection each year.    Under Schlumberger’s articles of incorporation, Schlumberger’s entire board of directors stands for reelection each year.
   Under Cameron’s bylaws, directors are elected by a majority of votes cast by stockholders. In contested elections, directors are elected by a plurality of the votes cast.    Under Schlumberger’s articles of incorporation, directors are elected at a general meeting of stockholders by a majority of votes cast by stockholders entitled to vote, meaning that the number of votes cast “for” a director must exceed the number of votes cast “against” that director. In certain contested elections, directors are elected by a plurality of the votes cast.

Number of Directors

  

The number of directors on Cameron’s board of directors is set at between five and 15 by Cameron’s restated certificate of incorporation.

 

The exact number of directors is determined from time to time by resolution adopted by a majority of the Cameron board of directors.

   The number of directors on Schlumberger’s board of directors is set at between five and 24 by Schlumberger’s articles of incorporation, as fixed and elected by the general meeting of Schlumberger stockholders.

Removal of Directors

   Cameron’s restated certificate of incorporation provides that a director may be removed only for    Schlumberger’s articles of incorporation and Curaçao law provide that a director may be

 

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   cause by holders of a majority of the outstanding shares entitled to vote generally in the election of directors.    dismissed at any general meeting of stockholders.
Vacancies on the Board of Directors    Under Cameron’s restated certificate of incorporation and bylaws, any vacancy on the board of directors may be filled by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director, which director will hold office for a term expiring at the next succeeding annual meeting of stockholders and until his or her successor has been elected and qualified.    Under Schlumberger’s articles of incorporation, the board of directors generally has the authority to appoint directors to fill any vacancies on the board to hold office until the next general meeting of Schlumberger’s stockholders.
   Cameron’s bylaws contain no citizenship requirements for directors.    Under Schlumberger’s by-laws, each quorum of the board of directors shall be constituted of a majority of non-U.S. citizens.
Notice of Stockholder Proposals or Nominations of Director Candidates by Stockholders   

Cameron’s bylaws generally permit stockholders to nominate director candidates or propose other proper business if the stockholder intending to make such nomination or proposal gives timely notice thereof in writing in proper form.

 

For a director nomination to be timely, Cameron’s bylaws require, subject to certain limited exceptions, that written notice of the nomination of a director candidate be received by Cameron’s Secretary not less than 60 days nor more than 90 days prior to the first anniversary of the previous year’s annual meeting.

 

For proposals of any other proper business to be timely, Cameron’s bylaws require, subject to certain limited exceptions, that written notice of such other proper business be received by Cameron’s Secretary not less than 90 days nor more than 120 days prior to the first anniversary of the previous year’s annual meeting.

   None of Schlumberger’s articles of incorporation and by-laws, nor Curaçao law contain any specific provisions that govern the submission of director nominations or other proposals by stockholders. As described above, special general meetings of stockholders may be called by one or more Schlumberger stockholders representing at least 10% of the votes that can be cast on the topics they wish addressed at such meeting.

 

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Amendment of Governing Documents   

Under Cameron’s restated certificate of incorporation and bylaws, subject to certain exceptions, an affirmative vote of the holders of at least 80% of the outstanding voting stock of Cameron is necessary to amend the following provisions of Cameron’s restated certificate of incorporation and bylaws: (1) provisions in the certificate of incorporation described under “Special Vote Requirement for Certain Combinations with Interested Shareholders,” unless such change is recommended by 2/3 of the directors who would be “continuing directors” under Cameron’s restated certificate of incorporation and (2) provisions in the certificate of incorporation and bylaws regarding the number of directors, director elections, director removal, director vacancies, stockholder action by written consent or special meetings of the stockholders.

 

The approval of the board of directors and the approval of the holders of a majority of the outstanding stock entitled to vote on the amendment is required to amend any certificate of incorporation provision not listed above.

   None of Schlumberger’s articles of incorporation and by-laws nor Curaçao law require a supermajority vote to approve the amendment of any specific provisions of such documents. The vote of a majority of the outstanding voting stock will suffice to approve an amendment to the articles of incorporation.
   The approval of the holders of 2/3 of the outstanding voting stock or a majority of the board of directors then in office is required to amend any Cameron bylaw provision not listed above.    Schlumberger’s by-laws may be amended only by the vote of a majority of the board of directors.

Financial Statements; Dividends

  

Cameron is not required to present

its financial statements or proposed dividends to its stockholders for inspection or approval.

   Under Curaçao law and Schlumberger’s articles of incorporation, Schlumberger is required to present annually its financial statements and proposed dividends to its stockholders for inspection and approval.

Change of Domicile

   Under Delaware law, approval of all stockholders is required in connection with a change in a    Under Schlumberger’s articles of incorporation, Schlumberger’s board of directors may transfer its

 

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   corporation’s domicile from Delaware or conversion of the corporation into a legal entity under the laws of another jurisdiction.    corporate seat to another jurisdiction, in accordance with the Curaçao Ordinance on Transfer of Domicile to Third Countries (Landsverordening Zetelverplaatsing Derde Landen). Under Curaçao law and Schlumberger’s articles of incorporation, Schlumberger may be converted into a legal entity under the laws of another jurisdiction to the extent allowed by applicable law.

Short-Form Merger; Buy-Out

   Under Delaware law, the owner or owners of at least 90% of a corporation’s outstanding equity may effect a “short-form” merger without the vote of the acquired corporation’s board of directors or stockholders.    Under Schlumberger’s articles of incorporation, any one person, or any two or more legal entities belonging to the same group, holding sha