Halliburton, the world's second biggest oil services company, will acquire rival Baker Hughes for $34.6 billion in cash and equity, the two companies announced in a joint press release on Monday.
"We are pleased to announce this combination with Baker Hughes, which will create a bellwether global oilfield services company and offer compelling benefits for the stockholders, customers and other stakeholders of Baker Hughes and Halliburton," Dave Lesar, Halliburton's chief executive, said in a statement.
"The transaction will combine the companies' product and service capabilities to deliver an unsurpassed depth and breadth of solutions to our customers, creating a Houston-based global oilfield services champion, manufacturing and exporting technologies, and creating jobs and serving customers around the globe."
Martin Craighead, the chairman and CEO of Baker Hughes said that the deal would create "a larger, more competitive global company."
"By combining two great companies that have delivered cutting-edge solutions to customers in the worldwide oil and gas industry for more than a century, we will create a new world of opportunities to advance the development of technologies for our customers," he said.
The tie-up of the world's second and third largest oil services companies would create a new energy behemoth, after days of speculation about a hostile takeover bid of Baker Hughes by Halliburton.
Both companies are based in Houston, Texas, and overlap in many activities and many areas, which would allow for productivity gains after a restructuring is carried out.
Recent news reports have said that the merged company would rise to the top global ranks in several sectors including fracking, and would control a 36 percent market stake in that market.