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August 31, 2009 6:24 PM

Six Firms Advise on $5.5 Billion Acquisition of BJ Services

Posted by Brian Baxter

Deal volume might be down, but six firms have landed roles on a $5.5 billion oil services acquisition by a company that traces its roots to the father of Howard Hughes.

Houston-based Baker Hughes, which makes products and services to drill oil and natural gas wells, announced it would pay $5.5 billion in cash and stock to reacquire the company that it spun off in 1991. Bloomberg calls the deal the largest oilfield-services takeover since 1998.

BJ Services is the third-largest provider of pressure-pumping services that help facilitate oil extraction by using a variety of substances, chemicals, and tools to ensure sustained production. The company has both onshore and offshore assets in most of the world's major oil- and gas-producing regions.

"This is a major deal in the oil-services industry and I think it will spawn additional consolidation, because people will want to get both the market cap and the array of services to compete with the biggest guys in the field," says Howrey antitrust cochair Sean Boland, who advised Baker Hughes on the deal.

Boland says the acquisition will allow Baker Hughes, which specializes in making drill bits and pumps, to branch out and compete with pressure-pumping business leaders like Halliburton and Schlumberger.

Along with Boland, Howrey antitrust partners Thomas Fina and Sylvie Maudhuit advised Baker Hughes on antitrust aspects of the acquisition. Boland says the firm has advised the company since the early 1990s when it was a client of predecessor firm Collier, Shannon, Rill & Scott.

Baker Hughes turned to its corporate counsel at Akin Gump Strauss Hauer & Feld for M&A advice. Energy and global transactions partners Christine LaFollette and Mark Zvonkovic, tax partner W. Thomas Weir, counsel Shar Ahmed, and associates Kameron Averitt, Matt Martinez, Alexandra Reuss, John Strickland, and Helena Wolin led the team from the firm.

Fulbright & Jaworski, another of Baker Hughes's outside firms, advised the company through tax chief John "Jack" Allender, tax partner Robert Phillpott, and employee benefits partner Stephanie Schroepfer. Delaware counsel was provided by corporate partner Frederick Alexander and associate Melissa DiVincenzo from Morris, Nichols, Arsht & Tunnell.

Houston-based BJ Services was advised by Skadden, Arps, Slate, Meagher & Flom M&A partners Louis Goodman, Frank Bayouth, and Margaret Cohen, employee benefits partner Neil Leff, tax partners Cliff Gross and Jessica Hough, and associate Laura Knoll. (Howrey's Boland says the firm is also handling international antitrust aspects of the merger for BJ Services, while Richard Weisberg is advising on U.S. antitrust matters.)

Corporate and securities cochair G. Michael O'Leary, corporate partner Melinda Brunger, and associate George Vlahakos from Andrews Kurth also advised BJ Services. The firm has been a longtime client of the company, who's general counsel, Margaret Shannon, is a former Andrews Kurth partner.

Shareholders of both companies must approve the transaction, which Baker Hughes expects to be completed by the end of the year.

Baker Hughes's expertise in the petroleum industry goes back to technological advances made by namesakes Reuben Baker and Howard Hughes, Sr., a century ago.

"Howard Hughes's father invented the tricone drill bit, which has dug most of the world's wells until diamond bits came along a few years ago," Boland says. "If you ever saw The Aviator, you see this part in the movie where they're playing with this big drill bit and [Howard] learned how to put the seals on the bit so they wouldn't fall apart when you're drilling."

In 1987 Baker International and Hughes Tool Company merged to create its current incarnation, which has absorbed several other oilfield products and services companies in recent years. Pending shareholder and regulatory approvals, BJ Services will be next.

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