Compagnie Générale de Géophysique (CGG) and Veritas DGC Inc. announced today that they have entered into a definitive merger agreement whereby CGG will acquire Veritas in a part cash, part stock transaction.
The aggregate value of the transaction is approximately US $3.1 billion, an implied premium of 34.7% over Veritas' 30-day average closing price of US $55.69 for the period ending on August 29, 2006;
Shareholders of the combined group will benefit from holding a world-class seismic stock;
The transaction features strong business, geographic and client fit, with expected pre-tax run rate synergies estimated by CGG at approximately US $65 million per annum.
The transaction is expected by CGG to be accretive to earnings per share in 2008 and approximately neutral in 2007 to cash earnings[1] per share;
Boards of Directors of both companies have unanimously approved the transaction; and
Following shareholder and regulatory approvals, the combined group will operate under the name "CGG-Veritas."
The combination of CGG and Veritas will create a strong global pure play seismic company, offering a broad range of seismic services, and geophysical equipment, through Sercel, to the industry across all markets. The combined seismic services will operate the world's leading seismic fleet with 20 vessels, including 14 high-capacity 3-D vessels, and land crews operating with equivalent capacity in both the Western and Eastern hemispheres. The multi-client services will benefit from two complementary, recent vintage, well-positioned seismic data libraries. In data processing and imaging, CGG's and Veritas' respective positions will combine to create the industry reference.
With a combined workforce of approximately 7,000 staff operating worldwide, including Sercel, the future group will provide, through continued innovation, the industry benchmark for seismic technology and services to a broad base of customers including independent, international and national oil companies.
The Board of Directors of Veritas has unanimously approved the agreement and will recommend that Veritas stockholders adopt the transaction. Similarly, the Board of Directors of CGG has also unanimously approved the agreement and will recommend that CGG's shareholders approve the issuance of new CGG stock to the Veritas shareholders. The transaction is expected to be completed around year-end 2006, subject to receipt of shareholder and regulatory approvals, as well as the satisfaction of other customary closing conditions.
The new Board of Directors is expected to reflect the combined shareholder base with Robert Brunck as Chairman and CEO. Thierry Pilenko, currently Chairman and CEO of Veritas, will be proposed for appointment as one of the combined company's new Board Directors.
After the merger, Geophysical Services will be headed by CGG's Christophe Pettenati-Auzière, President Geophysical Services. Reporting to him will be Timothy L. Wells, President Western Hemisphere and Luc Benoit-Cattin, President Eastern Hemisphere.
The conduct of Sercel's business will be unchanged in the context of this transaction.

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