Oil-field services provider Schlumberger (NYSE: SLB) is acquiring smaller rival Cameron International (NYSE: CAM) for $12.7bn (£8.1bn, €11.1bn) in cash and stock. The deal was agreed by the boards of both companies.

As per 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. That values a Cameron share at $66.36 apiece, representing a 56.3% premium to the company's most recent closing price. Upon completion of the transaction, Cameron shareholders will own about 10% stake in Schlumberger.

"This agreement with Cameron opens new and broader opportunities for Schlumberger," said Paal Kibsgaard, CEO of Schlumberger. "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."

Kibsgaard added that Schlumberger's reservoir and well technologies will be combined with Cameron's leadership in surface, drilling, processing and flow control technologies. He noted that the transaction would also bring in significant efficiency gains through lowering operating costs, streamlining supply chains, and improving manufacturing processes.

Schlumberger expects to achieve pretax synergies of about $300m and $600m in the first and second year, respectively. The company also expects the combination to be accretive to earnings per share by the end of the first year after closing.

"By bringing together Cameron and Schlumberger, we will be uniting two great companies with successful track records, performance and value creation," said Jack Moore, CEO of Cameron. "This exciting transaction builds on our successful partnership with Schlumberger on OneSubsea and will position Cameron for its next phase of growth."

The transaction is expected to close in the first quarter of 2016, subject to approvals from Cameron shareholders and regulators. On a pro forma basis, the combined company had 2014 revenues of $59bn.