Baker-BJ Merger: More Info Sought

Earlier today, Baker Hughes Incorporated (BHI - Analyst Report) and BJ Services Company (BJS) received a request from the Antitrust Division of the Department of Justice for additional information (commonly known as a second request) regarding their proposed merger. Both companies intend to comply with the request promptly.

Recently, Baker Hughes and BJ Services entered into a definitive agreement for a stock and cash merger, which represents a transaction value of $5.5 billion for BJ Services based on closing stock prices on Aug. 28, 2009. Post-merger, Baker Hughes shareholders will own approximately 72.5% of the combined entity, with BJ Services shareholders owning the rest. The Baker Hughes Board of Directors will be expanded to include two BJ Services Board members.
 
In addition to saving significantly on costs, shareholders of both companies get a more diversified oilfield services exposure. Baker Hughes expects to realize annual cost savings of approximately $75 million in 2010 and $150 million in 2011 as it eliminates redundant costs, consolidates facilities and further rationalizes field costs. The company expects the combination to be accretive to earnings per share in 2011.
 
Under the terms of the agreement, BJ Services stockholders will receive 0.40035 shares of Baker Hughes and cash of $2.69 in exchange for each share of BJ Services common stock. The agreement represents a premium of 16.3% to BJ Services stockholders over the company’s closing price on Aug. 28, 2009. The merger is expected to close at the end of this calendar year.

Read the full analyst report on BHI

Read the full analyst report on BJS