ChampionX Is Acquired By Schlumberger (NASDAQ: CHX) (NYSE: SLB)

As q1’24 earnings season kicks off, the markets have been acting estranged as a result of higher-than-expected inflationary pressures, leading investors to believe that Jerome Powell’s statement higher for longer wasn’t an understatement. Many of my dedicated readers will know that I have been in, and remain in, the camp of higher for longer, meaning I have not and do not expect rates to be cut in 2024. This week’s CPI print presents the argument that I have been pushing since the beginning of ThePeachPit, that consumers are being pressured by everyday costs, such as food & beverage and electricity. The largest gain, which caught me off guard, was how far motor vehicle insurance expanded y/y. I’m not sure how insurance companies can justify a 20% increase to insurance premiums, but in aggregate, as more electric vehicles hit the roads, insurance premiums will rise. On average, automotive insurance for EV owners is $2,280/year higher than insurance for traditional ICE vehicles.

I personally haven’t noticed my insurance premium changing from last year; however, someone took the liberty of slamming into my parked car while I was on my return flight from Houston on Tuesday, so maybe drivers are just becoming more reckless, or wreckfull. Luckily, I have full coverage and will not be penalized for the matter. Unfortunately, my vehicle is out of commission for the time being as the rear axle broke off. I suppose I ended my mini vacation at the Texas Cigar Festival with a bang!

Schlumberger (NYSE: SLB) Acquires ChampionX (NASDAQ: CHX)

This week’s single-name stock report covers the acquisition of ChampionX (NASDAQ: CHX) by OFS giant Schlumberger (NYSE: SLB). ChampionX was carved out of Ecolab (NYSE: ECL) back in June 2020 at a time when energy was falling out of favor. This deal was primarily designed to refocus Ecolab’s operations on their core business, cleaning solutions. At the time, as many of y’all will remember ever so fondly, cleaning solutions, such as disinfectants, were front and center during the 2020-2021 timeframe with an emphasis on hospital and food  &  beverage solutions. This spinoff, interestingly enough, coincided with General Electric’s (NYSE: GE) spinoff of Baker Hughes (NASDAQ: BKR), which was arguably a failed attempt to enter and exit the OFS business. ChampionX was formerly known as Apergy Corporation prior to the split and changed its name once emerging as an independent entity.

On April 2, 2024, Schlumberger announced their intention to acquire ChampionX in an all-stock transaction valued at $7.8b at the time of the announcement. This came in at a 14.7% premium to where shares were trading at market close April 1, 2024. Between the firm’s ability to generate cash flow and their advanced chemicals and artificial lift technologies, I anticipate this deal to be highly accretive to Schlumberger and should bring significant value to shareholders over the next few years.