Schlumberger in advanced talks to acquire Smith International: report

Schlumberger, the world's largest oilfield services company, is in advanced talks to acquire smaller rival Smith International Inc, The Wall Street Journal reported today, citing people familiar with the negotiations.

WSJ said that the deal would create an industry giant with revenues double that of its nearest rival Halliburton Co.

Schlumberger's revenue in 2009 was $22.7 billion, whileSmith's revenue was $8.2 billion in the same year, which adds up to $30.9 billion, compared to Halliburton's 2008 revenue of $14.7 billion.

Smith International, based in Houston, Texas, is one of the largest global providers of supplies products to gas and oil production and exploration companies, while Schlumberger also having Houston as one of its headquarters, is the world's largest oilfield services corporation with operations in approximately 80 countries.

According to the newspaper, Smith International's current market capitalisation is around $7.5 billion and assuming a typical deal premium of around 20 per cent, would take the transaction in the $9 billion range, though the paper could not be determine the exact value of the transaction last evening.

Last Thursday, 11 February 2009, Smith entered into a deal to acquire the Netherlands-based At Balance BV, a leading supplier of automated pressure drilling services from from Shell Technology Ventures Fund 1 B.V, for an undisclosed sum.

Smith had acquired a minority interest in At Balance in late 2007 and increased its stake to 35 per cent during 2009. While the transaction is subject to completion of a final agreement,Smith had then said that it anticipates concluding the acquisition of the remaining 65 per cent interest during the first quarter of this year.