Dresser signs agreement to purchase Baroid Corp. Merger to be completed early in '94

September 08, 1993|By Bloomberg Business News

HOUSTON -- Dresser Industries Inc. said it signed a definitive agreement to acquire Baroid Corp. for about $900 million in stock.

Together, the two oil field service concerns would control the drilling fluids market and strengthen Dresser's ranking as the nation's fourth-largest oil service company.

The merger, under which Baroid stock holders would turn over their shares for 0.40 of a Dresser share, would dilute Dresser earnings, said George Gaspar, an analyst with Robert W. Baird & Co.

"They certainly would cut costs, and it would make a bigger company," said Mr. Gaspar, who had estimated 1994 earnings at $1.25 a share. "But you've got to recognize the dilution to earnings."

Mr. Gaspar now expects earnings of roughly $1.10 a share next year. Dresser said the merger wouldn't affect earnings in the first year after the merger is completed sometime in mid-January 1994.

Shareholders of both companies must approve the merger.

Dresser said it believes the merger won't have a meaningful impact on earnings.

Even with the earnings dilution threat, Wall Street warmly greeted the merger.

Baroid shares closed up 75 cents to $8.375 on volume of 3.25 million shares, more than 11 times the three-month average daily volume of 283,000 shares. Dresser stock closed down 37.5 cents to $22.375 on volume of 1.1 million shares, almost double the average daily volume of 577,900 shares.

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