ENERGY firm Halliburton has agreed a takeover price of $38bn (£24bn) with oil and gas company Baker Hughes after months of discussions between the two firms.
The deal will see Halliburton paying $78.62 per Baker Hughes share, which represents an equity value of $34.6bn. Baker Hughes stockholders will own around 36 per cent of the combined company upon completion of the acquisition. Halliburton said it intended to finance the cash portion of the acquisition through a combination of cash on hand and fully committed debt financing.
Dave Lesar, chairman and chief executive of Halliburton, said the deal would “create a bellwether global oilfield services company and offer compelling benefits for the stockholders, customers and other stakeholders of Baker Hughes and Halliburton”.
He added: “The stockholders of Baker Hughes will immediately receive a substantial premium and have the opportunity to participate in the significant upside potential of the combined company. Our stockholders know our management team and know we live up to our commitments. We know how to create value, how to execute and how to integrate in order to make this combination successful.”
According to Lesar, the acquisition is expected to boost Halliburton’s cash flow by the end of the first year after closing, and to be accretive to earnings per share by the end of the second year. The deal is also expected to yield annual cost synergies of nearly $2bn.
Martin Craighead, chairman and chief executive of Baker Hughes, commented: “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 realised as well – or as quickly – on its own.”
Baker Hughes last week rejected Halliburton’s initial offer, which it claimed was not at an “adequate value level”.