* Technip offers 28 pct premium on CGG’s closing price
* CGG rebuffs offer, source says price too low
* Technip shares down 6.5 pct, CGG up 26 pct (Adds source, updates shares)
By Michel Rose and Benjamin Mallet
PARIS, Nov 20 (Reuters) - French oil services firm CGG has rebuffed a 1.47 billion euro ($1.84 billion) takeover offer from larger rival Technip, which wants to broaden the range of services it can offer cost-wary oil companies.
With oil prices down a third since June, oil firms have slashed spending, hitting valuations of oil services companies and creating chances for consolidation, such as this week’s $35 billion deal between Baker Hughes Inc and Halliburton Co .
Technip said it offered 8.3 euros per CGG share to bolster its own oil field, data and seismic equipment activities, a 28 percent premium on CGG’s closing share price on Wednesday.
Technip said it would “reinforce and then separate” CGG’s seismic acquisition unit, which supplies ships to oil firms to map the seabed and makes 60 percent of its revenue. CGG’s other divisions analyse the seismic data and provide equipment.
CGG, which was approached by Technip on Nov. 10, said in a statement the conditions to pursue a deal had not been met.
According to a Bloomberg report, the French government, which has small stakes in both companies, has pushed for a merger. The BPIfrance state investment bank, which declined to comment, owns 7 percent of CGG and 5.2 percent of Technip.
A source close to the matter said Technip had consulted the government because it is a shareholder, but that the initiative came from Technip’s CEO, who managed U.S. group Veritas when CGG bought it in 2007 and joined the board of the merged company.
“This has not been thought up in government ministries. This is Thierry Pilenko’s vision and he wants to do this because he knows both sides of the industry,” the source said.
CGG shares jumped earlier this month on speculation of takeover interest from U.S. oilfield services firm Baker Hughes, and rose as much as a quarter on Thursday. Technip shares closed down 7 percent.
Technip has a market capitalisation of 6.46 billion euros, while CGG’s is 1.42 billion.
CGG is a specialist in seismic data. Its fleet makes high-resolution maps of the seabed, helping oil companies design more precise 3-dimensional maps of hard-to-reach oil fields.
This business was hit earlier and harder by the turn in the oil cycle as companies cut seismic data acquisition budgets, before making more difficult savings elsewhere.
Technip intervenes lower in the oil services chain, building oil rigs and refineries onshore and offshore as well as providing pipelines, cables and riser systems.
Analysts had mixed views about the potential benefits for Technip. Some said a lack of significant overlaps left little room for savings and could hurt Technip shares.
“Even if the deal includes an exit from the acquisition branch, the most volatile, such a deal would have a negative impact on the resilient profile of Technip,” said Alain Parent, an analyst for Natixis in Paris.
Others said a deal made sense if viewed as a way for Technip to hedge against fluctuating spending by oil firms, while CGG’s technological expertise could help propel it into the “big league” of oil services companies.
“It is radical, untested, and would be the first time we have seen a pairing of a construction business model with the high technology of geosciences,” said London-based Bernstein analysts.
“To become a truly diversified multi-service provider, ranking alongside the likes of Schlumberger and Halliburton, will take major forays into other parts of the value chain.”
One source with knowledge of the matter said the companies were still talking about a deal, but a second said the CGG board considered the offer too low and had rejected it unanimously.
The second source said the bid was simply a “corporate raid” with the aim of dismantling the company.
CGG stock has slumped 71 percent since early 2013 as oil services companies bear the brunt of spending cutbacks by the major oil companies. (1 US dollar = 0.7988 euro) (Additional reporting by Nicholas Vinocur, Alexandre Boksenbaum-Granier, Raoul Sachs, Sarah Young and Blaise Robinson; editing by Clara Ferreira Marques and David Clarke)