Filed by Veritas DGC Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 and Rule 14d-2(b)
of the Securities Exchange Act of 1934
Subject Company: Veritas DGC Inc.
Commission File No.: 001-07427
Subject Company: Petroleum Geo-Services ASA
Commission File No.: 001-14614
Subject Company: Venus I
Commission File No.: 001-07427
[PGS LOGO] [VERITAS LOGO]
VERITAS AND PGS AGREE TO MERGE
$3.5 BILLION COMBINATION CREATES WORLD CLASS GEOPHYSICAL AND PRODUCTION COMPANY
Houston, TX and Oslo, Norway, November 26, 2001 - Petroleum Geo-Services ASA
("PGS") (NYSE: PGO, OSE: PGS) and Veritas DGC Inc. (NYSE & TSE: VTS) today
announced that their boards of directors have unanimously approved a definitive
agreement to combine the two companies in a merger of equals. The combination
will create the second largest company in the geophysical services industry with
an equity market capitalization of approximately $1.0 billion and a total
enterprise value of approximately $3.5 billion. The transaction is anticipated
to be immediately accretive to the combined company's earnings and cash flow per
share.
The new company will offer a full range of integrated marine and land
geophysical services and floating production operations. Benefits from the
merger include:
o Leading presence in global marine and land seismic markets
o Largest, newest and most geographically diverse seismic library with
over 400,000 square kilometers of modern 3D data
o More flexible, technologically advanced and efficient seismic fleet
o Owner and operator of four high-tech floating production, storage and
offloading (FPSO) vessels
o Operator of more than 20 production installations in the North Sea,
including six floaters
o Broader geographic scope in seismic acquisition capabilities
o Significant leading-edge data-processing, interpretation and reservoir
technologies
o Initial estimated annual cost savings of at least $35
million
o More stable and diversified cash flow stream
o Improved liquidity and enhanced financial flexibility
In a joint statement, Reidar Michaelsen, Chairman and Chief Executive Officer of
PGS, and Dave Robson, Chairman and Chief Executive Officer of Veritas, said,
"Growing global demand for reliable seismic data coupled with ongoing
consolidation, both among our customers and in our industry, make this an
opportune time for this combination. By combining our complementary,
high-quality seismic data libraries, we will be uniquely positioned to offer our
customers a much broader array of sophisticated 2D, 3D and 4D geophysical data
in active and highly prospective areas around the world. Our combination will
also create a more versatile marine seismic acquisition fleet that is second to
none, with the ability to provide data acquisition services anywhere, at any
time."
-more-
Page 2
"We are excited about the tremendous upside potential this transaction creates
for the combined company and its shareholders, customers and employees. The
combination of Veritas and PGS will enable us to offer fully integrated services
to our customers and will give us the strength, flexibility and resources to
compete more effectively and efficiently on a broader global scale. Our combined
company will also possess the depth of talent and financial strength to pursue
exciting new growth opportunities around the world."
INDUSTRY-LEADING PORTFOLIO
The combined company will boast an industry-leading portfolio including:
o 400,000 square kilometers of modern 3D data
o 21 marine seismic crews
o 83,000 land seismic channels capable of fielding 25 to 30 high-tech 3D
crews
o 4 high-tech, harsh environment FPSO vessels
o More than 20 data processing centers
o 8 data visualization centers
HEADQUARTERS, MANAGEMENT AND BOARD
The combined company will be headquartered in Houston, Texas and will maintain a
significant operating presence in Norway. Upon completion of the transaction,
Mr. Michaelsen will serve as Chairman and Co-CEO of the combined company, with
primary responsibility for the production business. Mr. Robson will become Vice
Chairman and Co-CEO of the combined company, with primary responsibility for the
geophysical business. The combined company's Board of Directors will be
comprised of ten directors, four designated from each of the two companies,
including Mr. Robson and Mr. Michaelsen, and two newly appointed unaffiliated
directors.
COST SAVINGS
The companies expect to achieve annual pre-tax cost savings of at least $35
million. Savings are expected to come from the elimination of duplicative
general and administrative and operating activities, improved operating
efficiencies and the optimization of research and development efforts.
TERMS AND CONDITIONS
Under the terms of the agreement, both Veritas and PGS will become wholly-owned
subsidiaries of a new holding company incorporated in the Cayman Islands. PGS
shareholders who exchange their shares will receive 0.47 shares of the new
holding company's common stock for each share of PGS they own. Veritas
shareholders will receive one share of the new holding company's common stock
for each share of Veritas they own. Based upon the closing stock prices of
Veritas and PGS on Friday, November 23, 2001, this represents a value of $7.64
per PGS share, or a 44 percent premium to PGS shares. The transaction is
expected to be tax-free to Veritas shareholders. The transaction is expected to
be taxable to PGS shareholders; however, PGS expects to apply for tax-exempt
treatment for Norwegian shareholders of PGS. At inception, PGS shareholders will
own approximately 60 percent of the new holding company and Veritas shareholders
will own approximately 40 percent.
-more-
Page 3
The transaction is conditioned upon, among other things, the approval of a
majority of Veritas shareholders, expiration of the Hart-Scott-Rodino waiting
period, listing of the new holding company's shares on the NYSE and customary
regulatory approvals. The transaction also requires 90 percent of PGS
shareholders to exchange their shares for the new holding company's ordinary
shares. The companies expect that the transaction can be completed in the second
quarter of 2002. The new company also intends to pursue the listing of its
shares on the Oslo and Toronto stock exchanges.
Merrill Lynch & Co. and ABG Sundal Collier & Co. acted as financial advisors,
and Merrill Lynch provided a fairness opinion to PGS. Baker Botts LLP and
Wikborg, Rein & Co. acted as PGS' legal advisors. Evercore Partners Inc. acted
as financial advisor and provided a fairness opinion to Veritas and Fulbright &
Jaworski LLP and Baker & McKenzie acted as its legal advisors.
ABOUT PGS
Petroleum Geo-Services is a technologically focused oilfield service company
principally involved in two businesses: Geophysical Operations and Production
Operations. PGS acquires, processes and markets 3D, time-lapse and
multi-component seismic data. In its Production Operations, PGS owns four
floating, production, storage and offloading (FPSO) systems and operates
numerous offshore production facilities for oil and gas companies. FPSOs permit
oil and gas companies to produce from offshore fields more quickly and
cost-effectively. PGS operates on a worldwide basis from Oslo, Norway and
Houston, Texas.
ABOUT VERITAS
Veritas DGC Inc. offers the oil and gas industry a comprehensive suite of
integrated geophysical services designed to manage exploration risk and enhance
drilling and production success worldwide. These services include seismic data
acquisition in all environments, data processing, data visualization, data
interpretation, reservoir characterization, and extensive non-exclusive seismic
data library surveys worldwide. With over 36 years of operating experience,
Veritas is one of the world's leading providers of advanced geophysical
technologies.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This press release contains forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These statements are based on management's current expectations and
beliefs and are subject to a number of factors and uncertainties that could
cause actual results to differ materially from those described in the
forward-looking statements. The forward-looking statements contained herein
include statements about future financial and operating results of the combined
company, including the accretiveness and estimated cost savings of the
transaction, the financial position of the combined company after completion of
the transaction, and the timing and other benefits of the transaction. These
statements are not guarantees of future performance, involve certain risks,
uncertainties, and assumptions that are difficult to predict, and are based upon
assumptions as to future events that may not prove accurate.
-more-
Page 4
Therefore, actual outcomes and results may differ materially from what is
expressed herein. In any forward-looking statement in which PGS or Veritas
expresses an expectation or belief as to future results, such expectation or
belief is expressed in good faith and believed to have a reasonable basis, but
there can be no assurance that the statement or expectation or belief will
result or be achieved or accomplished. The following factors, among others,
could cause actual results to differ materially from those described in the
forward-looking statements: the risk that PGS' and Veritas' businesses will not
be integrated successfully; costs related to the proposed transaction; failure
of Veritas stockholders to approve the proposed transaction; failure of a
sufficient number of PGS shareholders to exchange their shares for the new
holding company's shares; failure of other closing conditions to be satisfied
and other economic, business, competitive and/or regulatory factors affecting
PGS' and Veritas' businesses generally, including prices of oil and natural gas
and expectations about future prices, as set forth in PGS' and Veritas' filings
with the SEC, including their Annual Reports on Form 20-F (PGS) or Form 10-K
(Veritas) for the year ended 2000, especially in the Management's Discussion and
Analysis section, PGS' most recent Reports on Form 6-K and Veritas' most recent
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. PGS and Veritas
are under no obligation to (and expressly disclaim any such obligation to)
update or alter their forward-looking statements whether as a result of new
information, future events or otherwise.
ADDITIONAL INFORMATION
In connection with the proposed merger of Veritas and a subsidiary of the new
Cayman Islands holding company ("Caymanco"), Veritas and Caymanco will file a
proxy statement/prospectus with the Securities and Exchange Commission (the
"SEC"), and with respect to the proposed exchange offer for PGS shares, Veritas
and Caymanco will file a Tender Offer Statement on Schedule TO, which will
include a related prospectus, and PGS will file a Solicitation/ Recommendation
Statement on Schedule 14D-9. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ
THESE DOCUMENTS, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Investors and security holders may obtain a free copy of these
documents (when they are available) and other documents filed by PGS, Veritas
and Caymanco with the SEC at the SEC's web site at www.sec.gov. The proxy
statement/prospectus, the tender offer statement and solicitation /
recommendation statement (when they are available) and these other documents may
also be obtained for free from PGS or Veritas by calling PGS at (281) 589-7935,
or by calling Veritas at (832) 351-8300.
Veritas and its directors, executive officers and certain other members of its
management and employees may be soliciting proxies from its stockholders in
favor of the proposed merger. Information regarding the persons who may, under
the rules of the SEC, be considered to be participants in the solicitation of
Veritas' stockholders in connection with the proposed Veritas merger is set
forth in Veritas' proxy statement for its 2001 annual meeting, dated October 29,
2001 and filed with the SEC on October 29, 2001. Additional information will be
set forth in the proxy statement/prospectus when it is filed with the SEC.
-more-
Page 5
ANALYST/INVESTOR TELECONFERENCE
There will be a analyst/investor teleconference call on Tuesday, November 27,
2001 at 9:00 am CST / 10:00 am EST. The call will be webcast on both companies'
websites located at www.veritasdgc.com and www.pgs.com.
PGS CONTACTS:
J. Chris Boswell, SVP & CFO
Sam R. Morrow, SVP Finance & Treasurer
Phone: 281-589-7935
Dag W. Reynolds, Director European IR
Phone: +47 67 52 66 00
VERITAS CONTACTS:
Matthew Fitzgerald, SVP, CFO and Treasurer
Rene VandenBrand, VP Business Development
Phone: 832-351-8300
Mindy Ingle, Investor Relations
Phone: 832-351-8821
# # #