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Schlumberger agrees to buy Smith International

Schlumberger said it agreed to buy Smith International in a $11.34bn (£7.3bn) all-stock deal that will boost the oilfield services leader’s revenue to double that of its nearest rival.

Under the deal announced yesterday, Smith shareholders will receive 0.6966 shares of Schlumberger for each Smith share. The deal values Smith stock at $45.84, a 37.5 per cent premium over Thursday’s closing price. Schlumberger said it expects the acquisition to add to earnings per share in 2012. After the deal, expected to be completed in the latter half of the year, Schlumberger would boast revenue double that of nearest rival Halliburton.

The acquisition expands Schlumberger’s arsenal as the weakened sector begins to recover. Profits plummeted as oil and natural gas companies cut spending on projects when the boom collapsed in 2008.

Schlumberger expects to realise pretax synergies after costs of about $160m in 2011 and about $320m in 2012.