Houston: Schlumberger, the world's largest oilfield-services provider, is close to a deal to buy Smith International using mostly or all stock to pay for the purchase, said two people with knowledge of the matter.
The companies have been in intermittent takeover talks since at least last year and may reach an agreement in the next few days, the people said, speaking on condition of anonymity because the negotiations are private.
Houston-based Smith may fetch a premium to its market value, which was more than $8 billion (Dh29.3 billion) based on its share price on Friday, the person said.
Schlumberger, based in Houston and Paris, had sales of $22.7 billion last year, a 16 per cent drop from 2008. Including its M-I Swaco joint venture with Schlumberger, Smith is the world's largest provider of oil and natural-gas drilling fluids.
"It's a business that Schlumberger doesn't have and could control," said Philip Weiss, an analyst at Argus Research in New York who rates shares of both companies at "sell" and owns none. "It's probably one of the better businesses in Smith."
Smith jumped $4.35, or 13 per cent, to $37.70 on Friday in New York Stock Exchange composite trading after the Wall Street Journal first reported the firms were in talks. The stock had climbed 23 per cent this year before Friday. Schlumberger dropped $1.91, or 2.9 per cent, to $63.90.
CEO connection
Smith's chief executive officer, John Yearwood, was a senior adviser to Schlumberger CEO Andrew Gould before joining Smith in 2008.
Schlumberger announced on February 8 that Paal Kibsgaard would be its chief operating officer, a move that was expected to give Gould, 63, more time to work on big-picture issues, including potential mergers and acquisitions, said Bill Herbert, an analyst at Simmons in Houston.
