Halliburton buys oilfield rival Baker Hughes for $34B

Halliburton will buy Baker Hughes for in a deal worth more than $34.6 billion US, combining two of the world's biggest oilfield services companies.

Shareholders of Baker Hughes would receive the equivalent of about $78.62 US per share, including shares of Halliburton.

Upon the completion of the transaction, Baker Hughes stockholders will own approximately 36 per cent of the combined company.

The two Huston-based companies announced a deal early Monday. Baker Hughes had rejected an earlier offer as inadequate.

The chairman and chief executive officer of Baker Hughes, Martin Craighead, said the new offer provides a premium to his company's shareholders and provide them with a meaningful share in a more competitive global company.

Haliburton will pay $19 cash plus 1.12 common share for each Baker Hughes share. The deal gives Baker Hughes an enterprise value of $38 billion, including $34.6 billion of equity plus assumed obligations.

Fadel Gheit, senior analyst of oil and gas at Oppenheimer and Co., says the deal has almost certainly been structured so regulators will approve it. He also expects it will bring efficienciesto both companies at a time when the low price of oil has every producer looking for ways to cut costs.

In an interview with CBC's The Exchange with Amanda Lang, Gheitsaid only the largest oil companies will be safe from takeover if oil prices remain low.

"Theres no question in my mind that if oil remains under $80 for the next six months, youre going to see a lot of mergers and acquisitions," he said.