Oilfield service company Baker Hughes said yesterday it was to acquire smaller rival BJ Services in a £3.33billion cash and shares deal.
The two US-based companies employ more than 2,000 people in the Aberdeen area, but with little overlap between their products and services any impact on jobs in the north-east is likely to be minimal.
Baker says it expects to realise annual cost savings of about £45.5million next year and £91million in 2011 as it eliminates redundant costs, consolidates facilities, and trims field expenses.
A spokesman said it was unlikely two corporate headquarters in Houston would be required and there might be some senior management and back-office rationalisation following the acquisition.
On closing, and after new Baker Hughes shares are issued, BJ Services stockholders will own about 27.5% of Baker Hughes’s shares.
Baker chief executive Chad Deaton said: “BJ Services broadens our portfolio by adding products, technologies and talented people that are key to helping our customers unlock value in their reservoirs, particularly in unconventional gas and deepwater fields.
“It will better position us to drive international growth and to compete (with oilfield service giants Schlumberger and Halliburton) for the growing large integrated projects by incorporating pressure pumping into our product offering.
“Our two companies have highly complementary products and services with very little overlap.”
Bill Stewart, CEO at BJ Services, said: “We are very pleased to be joining forces with Baker Hughes and believe that this is an attractive combination for customers, employees, and BJ Services’ stockholders.”
Although pressure pumping accounted for less than 1% of Baker Hughes’s revenue in 2008, it is expected to generate about 20% of the combined group’s income.
The deal is subject to the approval of both companies’ stockholders, but the firms anticipate that the transaction could close as soon as the end of this year.
BJ Services is a provider of pressure-pumping, well-completion, production-enhancement and pipeline services. It has more than 16,000 employees in 50 countries worldwide – including 600-plus working in the Aberdeen area – and more than £3billion in annual revenue.
Baker Hughes provides reservoir consulting, drilling, formation evaluation, completion and production products and services.
It employs 36,000 people in 90 countries and in 2008 had revenue of £7.2billion. It has around 1,600 workers in the north-east.