Baker Hughes Inc is to acquire the pressure pumping company BJ Services Co in a transaction valued at US$5.5 billion.
The acquisition of the pressure pumping business should allow the combined company to more effectively compete for integrated projects and accelerate international growth.
“BJ Services broadens our portfolio by adding products, technologies and talented people that are key to helping our customers unlock value in their reservoirs, particularly in 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,” said Chad Deaton, Baker Hughes chairman, president and chief executive officer. “Our two companies have highly complementary products and services with very little overlap. Baker Hughes has a long record of partnering with BJ Services on major projects. The proposed merger will make Baker Hughes a stronger, more efficient service provider for our customers worldwide, by integrating pressure pumping with Baker Hughes’ wide range of products and services.”
While pressure pumping accounted for less than 1% of Baker Hughes’ revenues in 2008, post-acquisition it is expected to generate approximately 20% of the combined company’s revenues. Pressure pumping is growing in importance as customers look for new ways to unlock the full value of their reservoirs.
Baker Hughes expects to realize annual cost savings of approximately US$75 million in 2010 and US$150 million in 2011.