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Schlumberger May Pick A Partner

Inside Wall Street


Well, Schlumberger, what now? That's the question being asked by oil-patch pros ever since diversified oil-service company Halliburton announced in February that it was acquiring Dresser Industries in the largest oil-services merger ever. Whispers are that Schlumberger (SLB), the world leader in oil-and-gas drilling services, is poised to go after Baker Hughes (BHI), the world's largest maker of drill bits, whose 1997 sales totaled $3.7 billion. Schlumberger's sales of more than $10 billion would be dwarfed by the combined $16.2 billion sales of the Halliburton-Dresser duo.

A New York hedge-fund investment manager insists that Schlumberger has twice approached Baker Hughes last year with an offer. So far, Baker Hughes has kept Schlumberger away, he notes. Trading at 41 a share, Baker has a market cap of $6.7 billion. He figures that in a buyout, Baker is worth 55.

This money runner says Schlumberger, now at 78 1/2 and with a market cap of $38 billion, has told analysts it has no immediate plans. "But being the dominant player and being relegated to No.2 status, Schlumberger will surely have to buy someone sooner than later," says this pro. One analyst explains that Schlumberger needs to boost sales, and acquiring Baker would be a quick way to do that. Schlumberger and Baker didn't return calls.BY GENE G. MARCIALReturn to top

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