As part of a plan to resolve Justice Department objections to a merger with Hughes Tool Co., Baker International Corp. said Tuesday that it has agreed to sell its domestic electric submersible pump business to Trico Industries Inc. for an undisclosed price.
The definitive agreement, which was signed Monday between Orange-based Baker and Gardena-based Trico, still must be approved by Hughes and Baker shareholders and by the Justice Department.
Trico President and Chief Executive O W. D. Wagner said that if the approvals are obtained, the sale will close March 27. He said Baker's domestic electric submersible pump business represents about $6 million in annual revenue, and its acquisition would approximately double the annual sales of an existing electric submersible pump subsidiary that Trico operates in Bartlesville, Okla.
Although neither company would disclose the selling price of the Baker operation, industry analysts previously had said that it should be roughly the same as the annual revenue--or about $6 million.
In consolidating the operations, either the 100-employee Baker plant in Oklahoma City or Trico's 70-employee Bartlesville plant would be closed, said Trico's chief financial officer, Bob Litschi. As a result, he said "there will definitely be some layoffs" in Oklahoma at one or both of the plants.
The eight Baker employees in Orange County who handle marketing for Baker's electric submersible pump manufacturing operation will be retained by Trico, Litschi said, as will two or three Trico marketing specialists who work in Long Beach.
Wagner said he hopes the acquisition will pull Trico's tiny, money-losing electric submersible pump subsidiary into the black by providing economies of scale.
If the transaction is completed, he said, Trico, an oil field equipment company with about $83 million in annual revenue, will have about a 10% share of the domestic market for submersible electric pumps, trailing three larger manufacturers.
The Justice Department had threatened to file a lawsuit to block the Hughes-Baker merger out of concern that the combined companies would dominate the electric submersible pump and tricone rock bit markets. A tricone bit is a three-bladed bit used in drilling oil wells. Baker President Jim Woods said Tuesday that Baker is seeking a buyer for its domestic tricone rock bit business while continuing negotiations with the Justice Department in hope of reaching an agreement with the department by March 1.