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Baker Hughes and Akastor fit and merge offshore oil drilling operations

Baker Hughes and Akastor fit and merge offshore oil drilling operations

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American Baker Hughes (Baker Hughes) and Norway's Akastor said in a joint statement that the two companies plan to merge their respective offshore oil drilling equipment divisions to form a global company that serves the energy industry.

Affected by the new crown pneumonia epidemic and the plunge in oil prices last year, the demand for new drilling equipment has been weak. The two companies said that the estimated revenue of the new department fell by 16% in 2020 to 713 million US dollars.

Baker Hughes Subsea Drilling Systems and Akastor’s MHWirth established a joint venture company, each holding 50% of the shares, and has two headquarters in Houston, Texas and Kristiansand, a small town in southern Norway.

The two companies said: "The project will result in a leading equipment supplier with comprehensive delivery capabilities, financial strength and flexibility to address various customer priorities." They also added that this could lead to a return to growth.

After the transaction is completed, Baker Hughes will receive US$120 million in cash and US$80 million in debt from the new company; Akastor will receive US$100 million in cash and US$20 million in debt.

They said: "The company will obtain $220 million through bank loans to fund the cash consideration of Baker Hughes and Akastor."

Akastor's stock hit a 12-month high in early trading, rising 5% as of 0938 GMT, higher than the value of the Oslo benchmark stock, which fell 0.1%.

The transaction is subject to regulatory approval and is expected to be completed in the second half of 2021