$SLB / $CAM (SLB +2.7%) is offering more

$SLB / $CAM (SLB +2.7%) is offering more than $66 in cash and stock per share while takeover target Cameron International’s (CAM +2.5%) private market value may be only $63, according to Gabelli analysts who lower their recommendation on CAM to Hold from Buy.

The firm says arbitrageurs can earn a respectable ~10% annualized return on the deal, assuming a successful close by the end of Q1 2016 and given the current $3.62 deal spread.

However, the firm believes the deal makes strategic sense for both companies, combining SLB’s subsurface and wellbore expertise with the largest surface technology and second-largest subsea equipment manufacturer, and expects the deal will close with minimal regulatory scrutiny.