Baker Hughes Inc. (BHI) and BJ Services Co. (BJS) expect it will
be necessary to set a new date for shareholders to approve their
$6.67 billion merger, as U.S. regulatory approval for the deal is
unlikely by Friday.
The oilfield-services companies said they have all the required
foreign approvals, but as of Monday haven't received antitrust
approval from the U.S. Justice Department, which has raised issues
regarding the overlap between some of their Gulf of Mexico
businesses. If that isn't in hand by Friday's scheduled votes, they
will likely be postponed until the approval has been received.
Baker Hughes and BJ Services expect the deal will close before
the end of the month. Baker Hughes' acquisition of BJ is expected
to make Baker Hughes a more full-service company. BJ Services'
pressure-pumping business is a crucial component in developing
service-intensive shale natural gas fields, which are credited with
boosting output in the U.S.
Though the number of U.S. rigs online has been strengthening, an
abundant supply of natural gas and weak demand continues to keep
prices low.
BJ Services last month reported a swing to an unexpected fiscal
first-quarter loss as revenue and margins declined. Baker Hughes in
January reported better-than-expected fourth-quarter earnings as
oil and gas activity picked up from the prior quarter, though
profit still tumbled 81% owing to weak demand.
Shares of Baker Hughes and BJ Services closed at $50.04 and
$22.64, respectively, and were inactive premarket. Baker Hughes
shares are up 24% this year, while BJ Services rose 22%. The offer
values BJ at $22.72.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com