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Halliburton buys Baker Hughes in $34.6bn oil deal

Halliburton tonight unveiled a $34.6 billion (£22.1bn) takeover of Baker Hughes to create the second biggest oil services company behind Schlumberger.

The deal, at a 40% premium for Baker Hughes’ shareholders, is expected to yield $2bn in in synergies, or cost cuts, and boost returns to shareholders.

It comes at a time of falling oil prices and a desire by the oil companies to collaborate and seek greater efficiencies.

The combined companies, second and third biggest globally, will have almost $52bn in revenues but because of overlapping businesses Halliburton has agreed to sell some of its assets with $7.5bn revenues. It was not clear which territories, including the North Sea, would be affected.

Rumours of a merger arose a month ago and it has been sealed by improved terms including a $3.5bn termination fee, one of the highest ever agreed.

Dave Lesar will be chairman and chief executive of the new company which will operate under the Halliburton name. The board will be expanded to 15 members with the inclusion of three directors from Baker Hughes.

Halliburton will finance  the $19 a share cash portion of the $78.62 cash and shares deal through a combination of cash on hand and a committed debt financing.


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