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INTERNATIONAL: Halliburton agrees to buy Baker Hughes for US$34.6 bln

JAKARTA (Rambu Energy) – Halliburton Company (NYSE:HAL) and Baker Hughes Incorporated (NYSE:BHI), two major oil and gas service companies, have reached a definitive agreement, in which Halliburton will acquire all the outstanding shares of Baker Hughes in a stock and cash transaction. The transaction is valued at $78.62 per Baker Hughes share, representing an equity value of $34.6 billion and enterprise value of $38.0 billion.

The value is based on Halliburton’s closing price on Nov. 12, 2014, the day prior to public confirmation by Baker Hughes that it was in talks with Halliburton regarding a transaction.

Upon the completion of the transaction, Baker Hughes stockholders will own approximately 36 percent of the combined company.

Under the terms of the agreement, stockholders of Baker Hughes will receive, for each Baker Hughes share, a fixed exchange ratio of 1.12 Halliburton shares plus $19.00 in cash. The value of the merger consideration as of Nov. 12, 2014 represents 8.1 times current consensus 2014 earnings before interest, tax, depreciation and amortization [EBITDA] estimates and 7.2 times current consensus 2015 EBITDA estimates.

The transaction value represents a premium of 40.8 percent to the stock price of Baker Hughes on Oct. 10, 2014, the day prior to Halliburton’s initial offer to Baker Hughes. And over longer time periods, based on the consideration, this represents a one year, three year and five year premium of 36.3 percent, 34.5 percent, and 25.9 percent, respectively, Halliburton said in the statement.

The transaction combines two highly complementary suites of products and services into a comprehensive offering to oil and natural gas customers. On a pro-forma basis the combined company had 2013 revenues of $51.8 billion, more than 136,000 employees and operations in more than 80 countries around the world, Halliburton said.

The agreement has been unanimously approved by both companies’ Boards of Directors.

“We are pleased to announce this combination with Baker Hughes, which will create a bellwether global oilfield services company and offer compelling benefits for the stockholders, customers and other stakeholders of Baker Hughes and Halliburton,” said Dave Lesar, Chairman and Chief Executive Officer of Halliburton.

“The transaction will combine the companies’ product and service capabilities to deliver an unsurpassed depth and breadth of solutions to our customers, creating a Houston-based global oilfield services champion, manufacturing and exporting technologies, and creating jobs and serving customers around the globe,” Dave Lesar said.

“This brings our stockholders a significant premium and the opportunity to own a meaningful share in a larger, more competitive global company,” Martin Craighead, Chairman and Chief Executive Officer of Baker Hughes said.

“By combining two great companies that have delivered cutting-edge solutions to customers in the worldwide oil and gas industry for more than a century, we will create a new world of opportunities to advance the development of technologies for our customers,” Craighead said.

“We envision a combined company capable of achieving opportunities that neither company would have realized as well –or as quickly – on its own, all while creating exciting new opportunities for employees,” Chraighead added. (*)

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