1 September 2009

Oilfield services company snaps up rival

In a move that will allow for international expansion, oilfield services company Baker Hughes will pay $5.5 billion to purchase its rival BJ Services Co.

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, the company said.

The chief executive of Baker Hughes, Chad C. Deaton, said the deal would give a boost to 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,” Deaton said. Integrated oil companies are active in all phases of the business including production, refining, transportation, and marketing.

Pressure pumping made up less than 1% of Baker Hughes 2008 revenue, but should comprise about 20% after the deal is complete.

The acquisition should close by year’s end.

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