A business with a 144-year history, BJ Services is again emerging as a standalone company after Houston based Baker Hughes said Friday it finalized the sale of a majority stake in the hydraulic fracturing and cementing business.
The new company will operate as an independent joint venture — it won’t be publicly traded — and restore the BJ Services name as its own company. BJ Services was founded in 1872 as the Byron Jackson Company. The deal was first announced in late November and closed on Friday.
Baker Hughes bought BJ Services Co., of Houston, for $5.5 billion in 2009, to expand into the fracking business, and the deal has served as a financial drag for Baker Hughes ever since. Baker Hughes will still keep its international and offshore pressure pumping business.
The BJ Services pressure pumping deal brings Baker Hughes into partnerships with Houston-based CSL Capital Management private equity firm and Goldman Sach’s merchant banking fund, called West Street Energy Partners. Baker Hughes will keep a 46.7 percent ownership stake in BJ Services.
Baker Hughes’ pressure pumping business will combine with CSL’s Allied Oil & Gas Services business, which was acquired earlier this year. New Allied Chief Executive Warren Zemlak, a veteran of Schlumberger, will lead the new BJ Services, which will be headquartered in Tomball.
CSL and Goldman Sachs will together contribute $325 million in cash to the new company. Baker Hughes will receive $150 million of the total, while the remaining $175 million will position BJ Services for growth.
The deal comes shortly after it was announced that Baker Hughes is combining with a unit of General Electric in a $32 billion merger that would create an expanded Baker Hughes. GE, based in Boston, would own 62.5 percent of the combined company, which will continue to trade under Baker Hughes’ BHI stock ticker.
Ever since the failed acquisition of Baker Hughes by Halliburton earlier this year, Baker Hughes management said the plan was to sell a stake in the pressure pumping business as Baker Hughes focuses more on technology and product sales.
This story originally appeared in the Houston Chronicle – an Energy Voice content partner. Read more here.
