Baker Hughes, Western Atlas Agree to Merge
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HOUSTON — Baker Hughes Inc. and Western Atlas Inc. have entered a definitive merger agreement valued at $5.5 billion.
In a news release Sunday, Baker Hughes said Western Atlas’ shareholders will receive 2.4 shares of newly issued Baker Hughes common stock for each Western Atlas common share, subject to adjustment. Based on Baker Hughes’ closing price on Friday, the transaction would be valued at $98.70 per Western Atlas share.
The agreement was unanimously approved by each company’s board, Baker Hughes said.
The combined company, which would retain the Baker Hughes name, is expected to have revenue of $6.5 billion in 1998 and 36,000 employees. The company’s headquarters will be in Houston.
Western specializes in finding oil by mapping geological formations with sound waves and using wires to manipulate tools and gauges in the thin confines of oil and natural-gas wells. Baker, which supplies drilling equipment, needs those businesses in order to win customers from industry leaders Schlumberger Ltd. and Halliburton Co.
“Baker Hughes doesn’t have divisions that provide those services,” said John Lovoi, an analyst with Morgan Stanley, Dean Witter, Discover & Co., who rates the stock a “strong buy.” “It is the major difference separating them from Schlumberger and Halliburton.”
Neither company could be reached for comment.
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