oil drilling

Under the agreement, of Baker Hughes stockholders will receive a fixed exchange ratio of 1.12 Halliburton shares plus $19.00 in cash for each Baker Hughes share.

Halliburton chairman and chief executive officer Dave Lesar said: "The transaction will combine the companies’ product and service capabilities to deliver an unsurpassed depth and breadth of solutions to our customers, creating a Houston-based global oilfield services champion, manufacturing and exporting technologies, and creating jobs and serving customers around the globe."

"The stockholders of Baker Hughes will immediately receive a substantial premium and have the opportunity to participate in the significant upside potential of the combined company.

Baker Hughes stockholders will own approximately 36% of the combined company following completion of the transaction.

"We expect the combination to yield annual cost synergies of nearly $2 billion. As such, we expect that the acquisition will be accretive to Halliburton’s cash flow by the end of the first year after closing and to earnings per share by the end of the second year.

"We anticipate that the combined company will also generate significant free cash flow, allowing for the return of substantial capital to stockholders," Lesar said.

Scheduled to be closed in the second half of 2015, the transaction is subject to regulatory approval.

Image: Baker Hughes provides oilfield services, products, technology and systems to the oil and natural gas industry. Photo: courtesy of Vlado/Freedigitalphotos.net.