Baker Hughes to buy BJ Services in $5.5B deal

[August 31, 2009]  HOUSTON (AP) -- Oilfield services company Baker Hughes Inc. said Monday that it will buy BJ Services Co. in a cash-and-stock deal valued at $5.5 billion that the company said will allow it to drive international growth and compete for projects of companies engaged in all phases of the oil business.

The acquisition is expected to produce $75 million in cost savings for Baker Hughes in 2010 and $150 million in 2011, and add to earnings per share in 2011.

Baker Hughes Chairman, President and CEO Chad C. Deaton said in a statement that the transaction will particularly help customers with unconventional gas and deepwater fields.

"It will better position us to drive international growth and to compete for the growing large integrated projects by incorporating pressure pumping into our product offering," he added. Integrated oil companies are active in all phases of the business including production, refining, transportation and marketing.

Pressure pumping made up less than 1 percent of Baker Hughes 2008 revenue, but is expected to comprise about 20 percent of the company's revenue after the deal is complete.

BJ stockholders will receive 0.40035 shares of Baker Hughes and $2.69 in cash for each share they own. The deal represents a 16.3 percent premium to BJ's $15.43 Friday closing stock price, the companies said.

BJ's shareholders will have an approximately 27.5 percent stake in Baker Hughes once the acquisition closes, and two BJ services board members will join Baker's board.

The acquisition, which has approval from both companies' boards, may close by year's end. It still needs the approval of both companies' shareholders.

[Associated Press]

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