U.S. Justice Looking at Smith Takeover

By David Wethe

April 5 (Bloomberg) -- Schlumberger Ltd., the world’s largest oilfield contractor, said the U.S. Justice Department’s Antitrust Division made a second request for information on the company’s $11.2 billion takeover of Smith International Inc.
The proposed transaction is still scheduled to close in this year’s second half, Schlumberger, based in Houston and Paris, said today in a statement. The companies announced Schlumberger’s purchase of Houston-based Smith, the oilfield- services industry’s biggest acquisition on record, in February.
Areas of overlap between the companies include directional drilling and logging of well results, analysts with Houston- based Tudor Pickering Holt & Co. said at the time the all-stock deal was announced. Bill Herbert, an analyst at Simmons & Co. in Houston, said he expected the request for additional information. Antitrust regulators seek to ensure mergers don’t diminish competition in an industry.
“The Justice Department has been relatively exacting with regard to the deals we’ve seen,” said Herbert, who rates shares of both companies at “overweight” and owns neither. “There is quite a bit of overlap between Schlumberger and Smith.”
The antitrust review could lead to Schlumberger’s being forced to sell some assets, Herbert said. He said he expects the transaction to close on schedule.
Schlumberger rose $1.20, or 1.9 percent, to $65.77 at 4 p.m. in New York Stock Exchange composite trading. Smith climbed 84 cents to $44.43.
To contact the reporter on this story: David Wethe in Houston at dwethe@bloomberg.net.
Last Updated: April 5, 2010 16:19 EDT