BGP has signed a term sheet with ION Geophysical Corporation, based in Houston, Texas, to create a joint venture that will provide land seismic products in a broad range of countries. ION is a long-time supplier of land seismic devices to BGP.
The joint venture will align ION's innovative land equipment business with BGP's own expertise and experience in land seismic operations to create a new enterprise with the resources, technology and experience required to provide state-of-the-art products and services on a global basis. In exchange for a cash payment of approximately $175 million, BGP will receive a 51 percent interest in the joint venture and an approximate 16.66 percent interest in the common stock of ION.
Mr. Wang Tiejun, President of BGP, stated, "By joining forces through our planned joint venture, we believe we can combine BGP's operational knowledge and experience, and emerging land seismic product portfolio, with ION's innovative products and culture to become the leading land seismic technology company of the 21st century."
The combination of assets and operations within the joint venture will provide opportunities for improved economies of scope and scale, along with enhanced efficiencies across the venture’s supply chain, enabling the joint venture to deliver products in a more timely manner and at an overall lower cost to its customers. By combining ION's strengths in innovative land equipment with BGP’s emerging geophysical product portfolio and expertise in operating land seismic acquisition crews, new joint venture products are expected to be designed and field-tested for reliability, quality, and productivity to the benefit of all land contractors.
The transaction is subject to the completion of regulatory reviews and receipt of applicable approvals in the United States and the People's Republic of China, which are expected to be completed by the first quarter of 2010.
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