Technip, Europe’s largest oil-and gas-services company, proposed buying CGG for about 1.47 billion euros (US$1.8 billion) in a cash offer rejected by the seismic surveyor.

Technip bid 8.30 euros a share and sought a “constructive dialogue” with CGG’s directors, it said in a statement.

Slumping crude prices are forcing companies that sell the industry services to consider acquisitions as oil producers cut investment budgets. Technip’s offer follows this week’s $34 billion deal to combine the world’s second- and third-largest oil-services providers, Halliburton Co. and Baker Hughes Inc.

The potential deal “reflects the extremely deteriorated conditions in the environment for oil services firms and the need to carry out defensive mergers in response,” Natixis SA analyst Alain Parent said in a note. The bank said the potential for a higher bid is limited, valuing CGG at 8.7 euros plus a 10% premium for combined financial and managerial savings.

The French state, controlling stakes in both companies, is pushing for a combination, said a person familiar with the matter who declining to be identified. The government through the BPI fund and IFP Energies Nouvelles holds 18% of the voting rights of CGG. BPI also owns 5.2% of Technip.

Proposed Deal

The deal has “strong strategic and industrial logic” and would create a first-tier provider, Technip said, adding that its own “strong balance sheet” and current credit rating would be maintained. Standard & Poor’s rates Technip BBB+. CGG confirmed the “unsolicited” offer and said in a statement that conditions to pursue the proposal hadn’t been met.

Technip says it plans to reinforce and separate CGG’s seismic data-acquisition division.

“Technip has plenty of cash to do the deal,” Sanford C. Bernstein LLC analysts including Nicolas Green wrote in a note. The transaction would improve margins for the company after 2016 if costs and profitability are improved at CGG.

“Seismic is perhaps the most cyclical of the oil services, and if today we are somewhere near the bottom, any offer price at or around this level should be seen as a reasonable price,” the analysts wrote. “If the deal falls through, CGG will have further to fall before it troughs the cycle.”

CGG lost as much as two-thirds of its value from peak to trough this year as it grappled with global oversupply in the industry. The company, which has renegotiated debt terms and cut its fleet and workforce this year, has been hit by falling demand from customers amid plummeting crude prices.