Baker Hughes Inc. (BHI) and BJ Services Co. (BJS) announced that their Boards have approved a definitive merger agreement, which represents a transaction value of $5.5 billion for BJ Services based on closing stock prices on August 28, 2009.
The agreement represents a premium to BJ Services stockholders of 16.3% over the closing price of BJ Services stock on August 28, 2009. As per the deal, 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. Upon closing, and reflecting the issuance of new Baker Hughes shares, BJ Services stockholders collectively will own approximately 27.5% of Baker Hughes' outstanding shares.
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.
Baker Hughes expects the combination to be accretive to earnings per share in 2011.
The Baker Hughes Board of Directors will be expanded to include two BJ Services Board members.
The merger is subject to the approval of both Baker Hughes' and BJ Services' stockholders as well as other customary approvals. The companies anticipate that the transaction could close as soon as the end of the calendar year.
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