Norway-based TGS said the combined entity will be valued at approximately $2.61bn.
Under the terms of the agreement, PGS shareholders will be entitled to receive 0.06829 ordinary shares of TGS in exchange for every PGS stock held.
Following the merger, TGS shareholders will own approximately a 66.66% stake in the merged entity with the remaining 33.33% stake held by PGS shareholders.
With the acquisition, TGS, which is engaged in providing data and intelligence to oil, gas and other energy sectors, hopes to create a full-service geophysical data company.
The combined entity is expected to provide services in areas such as multi-client data, streamer data acquisition, ocean bottom node data acquisition, imaging and new energy data.
Additionally, the deal reduces supply chain risks and will increase economies of scale and efficiency, TGS noted.
Cost synergies from the merger are expected to save the company an estimated $50m annually.
TGS chair of the board Chris Finlayson said: “This is a strategic transaction for TGS and a major step on the journey we started in 2019. It will combine the capabilities of both companies to create a geophysical powerhouse.
“The transaction continues TGS’ strategic development from a pure multi-client seismic company to the leading acquirer and provider of geophysical data to both the oil and gas and new energy industries.”
PGS president and CEO Rune Olav Pedersen said: “The seismic industry is changing, whereby production seismic is becoming increasingly important alongside the traditional exploration seismic.
“By combining TGS’ and PGS’ complementary resources, we create a fully integrated geophysical service provider well positioned to generate significant value for all stakeholders.”
The board of directors of both companies have approved the transaction, which is anticipated to close in the first half of 2024.
In June this year, TGS launched a cloud-based analytics platform to benchmark, predict and optimise well performance.