Today, Schlumberger Limited (NYSE:SLB) and Cameron International Corporation (NYSE:CAM) jointly declared a definitive merger agreement in which the companies will combine in a stock and cash transaction. The agreement was unanimously approved by the boards of directors of both companies.

Under the terms of the agreement, Cameron shareholders will receive 0.716 shares of Schlumberger common stock and a cash payment of $14.44 in exchange for each Cameron share.

After the release of this definitive merger agreement, Cameron’s shares skyrocketed 41.13% or 17.47 points, on Wednesday, while Schlumberger’s shares faced a decline of almost -4.44%, and hit its new 52-week low price of $68.01.

According to the report, based on the closing stock prices of both companies on August 25, 2015, the agreement places a value of $66.36 per Cameron share, representing a 37.0% premium to Cameron’s 20-day volume weighted average price of $48.45 per share, and a 56.3% premium to Cameron’s most recent closing stock price of $42.47 per share. Upon closing, Cameron shareholders will own about 10% of Schlumberger’s outstanding shares of common stock.

Schlumberger anticipates realizing pretax synergies of about $300 million and $600 million in the first and second year, respectively. Initially, the synergies are primarily related to reducing operating costs, streamlining supply chains, and improving manufacturing processes, with a growing component of revenue synergies in the second year and beyond. Schlumberger also anticipates the combination to be accretive to earnings per share by the end of the first year after closing.

The transaction combines two complementary technology portfolios into a “pore-to-pipeline” products and services offering to the global oil and gas industry. On a pro forma basis, the combined company had 2014 revenues of $59 billion.

Paal Kibsgaard, Chairman, and Chief Executive Officer of Schlumberger remarked, “This agreement with Cameron opens new and broader opportunities for Schlumberger. At our investor conference in June 2014, we highlighted how the E&P industry must transform to deliver raised performance at a time of range-bound commodity prices. With oil prices now at lower levels, oilfield services companies that deliver innovative technology and greater integration while improving efficiency, which our customers increasingly demand, will outperform the market.

“We believe 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. Deep reservoir knowledge further enabled by instrumentation, software and automation, will launch a new era of complete drilling and production system performance.

“In addition, we will achieve noteworthy efficiency gains through lowering operating costs, streamlining supply chains, and improving manufacturing processes while leveraging the Schlumberger transformation platform. We look forward to welcoming the talented employees of Cameron and are happy that they will be joining the Schlumberger team as our fourth product group.”

Jack Moore, Chairman and Chief Executive Officer of Cameron, added, “This exciting transaction builds on our successful partnership with Schlumberger on OneSubsea and will position Cameron for its next phase of growth. For our shareholders, this combination provides noteworthy value, while also enabling them to own a meaningful share of Schlumberger. Together, we will create a premier oilfield equipment and service company with an integrated and expanded platform to drive accelerated growth.

“By bringing together Cameron and Schlumberger, we will be uniting two great companies with successful track records, performance, and value creation. We look forward to working closely with Schlumberger to achieve a seamless post-closing integration and long term value for all of our stakeholders.”

The transaction is subject to Cameron shareholders’ approval, regulatory approvals, and other customary closing conditions. It is anticipated that the closing of the transaction will occur in the first quarter of 2016.

Goldman, Sachs & Co. is acting as financial advisor, and Baker Botts LLP and Gibson Dunn & Crutcher LLP are serving as legal counsel, to Schlumberger. Credit Suisse is acting as financial advisor and Cravath, Swaine & Moore LLP is serving as legal counsel to Cameron.

Schlumberger Limited supplies technology, integrated project administration, and information solutions to the oil and gas exploration and production industries worldwide. The company operates through Reservoir Characterization Group, Drilling Group, and Production Group segments.

Cameron International Corporation provides flow equipment products, systems, and services worldwide. The company’s Subsea segment offers integrated solutions, products, systems, and services to the subsea oil and gas market, counting integrated subsea production systems involving wellheads, subsea trees, manifolds and flowline connectors, and subsea processing systems.