Baker Hughes acquires BJ Services

London: Baker Hughes Inc, the world's third-largest oil field services provider, agreed to buy BJ Services Co for $5.5 billion to add to its unconventional natural gas and deepwater businesses.

The price represents a 16.3 per cent premium to BJ Services' stock price on August 28 and will leave BJ stockholders owning about 27.5 per cent of Baker Hughes' outstanding shares, Texas-based Baker Hughes said in a statement yesterday.

BJ Services shareholders will receive 0.40035 share of Baker Hughes' stock and a cash payment of $2.69 a share.

The addition of BJ Services, also based in Houston, Texas, will help Baker Hughes "compete for the growing large integrated projects by incorporating pressure pumping into our product offering," Baker Hughes Chief Executive Officer Chad Deaton said in a statement.

The acquisition will add to earnings in 2011, Baker Hughes said.

The company said it expects to realise cost savings of about $75 million in 2010 and $150 million in 2011.

Goldman, Sachs & Co advised Baker Hughes' on the deal.

Baker Hughes was unchanged at $38.09 on Aug-ust 28 on the New York Stock Exchange.

BJ Services rose one cent to $15.43.