BHI-BJS Merger Approved - Analyst Blog

Shareholders of Baker Hughes Inc. (BHI) and BJ Services Company (BJS) approved the proposed merger between the two companies. Both the companies declared the news yesterday following their special meetings of shareholders.

In August 2009, Baker Hughes agreed to acquire BJ Services in a cash and stock deal valued at $5.5 billion. Under the agreement, for each share of BJ Services common stock, holders will receive 0.40035 shares of Baker Hughes and cash of $2.69. The agreement represents a premium of 16.3% to BJ Services stockholders over the company’s closing price on Aug 28, 2009.

While Baker Hughes’ shareholders approved the additional share issuance, BJ Services’ shareholders voted in favor of the agreement and plan of the merger. As the proposed merger requires the divestiture of some assets, the two companies had reached a general understanding with the Antitrust Division of the U.S. Department of Justice.

Following the approval of the Antitrust Division, the merger is expected to be closed in early April. Post merger, Baker Hughes shareholders will own approximately 72.5% of the combined entity, with BJ Services shareholders owning the rest.

In addition to saving significantly on costs, shareholders of both the companies get a more diversified oilfield service exposure. BJ Services shareholders get exposure to the much more stable top-tier global oilfield services over and above its existing pressure pumping services. Baker Hughes shareholders will gain access to more efficient oilfield services by integrating pressure pumping with the company’s wide range of products and services.