NEW YORK (Reuters) - U.S. oilfield services leader Schlumberger Ltd is in advanced talks to buy rival Smith International Inc , the Wall Street Journal said, citing people familiar with the negotiations.
The report of the deal, which would create an industry giant with revenues double rival Halliburton Co
The deal would be the latest consolidation in the oilfield services sector that has seen its profits shrink as oil and gas companies reduced spending on projects after the boom that ended in 2008.
In August, No. 3 oil field services company Baker Hughes Inc
Smith International's current market capitalization as of Thursday's close was around $7.5 billion, and a typical deal premium of about 20 percent would put the purchase price near $9 billion.
Smith International is one of the largest global providers of products and services used by operators during the drilling, completion and production phases of oil and natural gas development activities.
Schlumberger and Smith International could not be reached for comment.
Schlumberger and Smith currently operate a 60-40 joint venture called M-I SWACO that supplies drilling fluids and specialty tools to the oil and gas sector.
A potential bid for Smith would likely get a hard look from anti-trust regulators, one analyst said, and likely require the companies to divest some assets.
While the acquisition would give Schlumberger access to Smith's drill bit supply business, that benefit was much smaller than Baker Hughes' strategic move to buy BJ Services, according to analyst Joe Hill with Tuder, Pickering Holt Energy Research in Houston.
"There's no such imperative for Schlumberger to do this. That's why it's a bit of a headscratcher," he said.
Still, Schlumberger is not likely to face another potential suitor for Smith, since few other companies would see a better fit for their business, he said.
(Reporting by Sakthi Prasad in Bangalore and Matt Daily in New York; Editing by Valerie Lee, Dave Zimmerman)
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