11:15 AM New York – Baker Hughes expands into pressure pumping with the acquisition of BJ Services.
Baker Hughes Offers $5.5 Billion for BJ Services
Baker Hughes Inc decreased 7.3% to $35.30 after it agreed to acquire BJ Services for $5.5 billion.
Two Houston, Texas based companies have very little overlap in their services and BJ Services is known for its pressure pumping services for natural gas production. The pressure pumping is used in the extraction of crude oil from oil shale formations. Most of the recent hydrocarbon discoveries in Canada have been in oil shale formations.
The BJ Services shareholders will receive 0.40035 share of Baker Hughes stock and $2.69 in cash per share. The offer was priced at 16.3% premium to Friday’s closing price.
Upon the completion of the merger, BJ Services shareholders will control 27.5% of Baker Hughes’ outstanding shares.
The Baker Hughes Board of Directors will be expanded to include two BJ Services Board members.
Baker Hughes expects the transaction to be accretive in 2011 and save $75 million in 2010 and $150 million in 2011.
Goldman Sachs acted as financial advisor to Baker Hughes and Greenhill & Co. rendered fairness opinion and acted as financial advisor to BJ Services.
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