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Halliburton takes over Baker Hughes for $34.6B

Precise takes a look at the merger between these two major oil-drilling companies.

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Halliburton Company and Baker Hughes Incorporated have announced a definitive agreement under which Halliburton will acquire all the outstanding shares of Baker Hughes in a stock and cash transaction. The merger, which will save the oil-drilling companies a combined $2 billion in costs, has been unanimously approved by both companies’ Boards of Directors and a flag with the Baker Hughes Inc. logo was seen flying outside one of the company’s facilities as of Monday November 17th.

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 (based on Halliburton’s closing price on November 12th; the day prior to public confirmation by Baker Hughes that it was in talks with Halliburton). Upon the completion of the transaction, Baker Hughes stockholders will own approximately 36 percent of the combined company.

The combination of the two companies’ resources, including operations and research and development, will undoubtedly help them compete with industry leader Schlumberger.

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

Lesar concluded, “We believe that the expertise of both companies’ employees and leaders will be a competitive advantage for the combined company. Together with the people of Baker Hughes, we will establish a team to develop a detailed and thoughtful integration plan to make the post-closing transition as seamless, efficient and productive as possible. We look forward to welcoming the talented employees of Baker Hughes and are pleased they will be joining the Halliburton team.”