Baker Hughes Co. and Akastor ASA plan to merge their offshore oil drilling equipment units to form a global company serving the energy industry, the U.S. and Norwegian firms said in a joint statement on March 2.

Demand for new drilling equipment has been weak amid the COVID-19 pandemic and last year’s plunge in the price of oil, and the companies said proforma revenue for the new unit declined by 16% in 2020 to $713 million.

Forming a joint venture (JV) owned 50:50 by each of the parent companies, the merger of Baker Hughes Subsea Drilling Systems with Akastor’s MHWirth AS maintains dual headquarters in Houston in the U.S. and the southern Norwegian town of Kristiansand.

Merrill A. “Pete” Miller will serve as chairman and CEO of the JV company. Miller has been in the oil and gas industry over 40 years holding various leadership roles including chairman, president and CEO of National Oilwell Varco.

“The transaction will result in a leading equipment provider with integrated delivery capabilities, financial strength, and flexibility to address a full range of customer priorities,” the firms said, adding that this could result in a return to growth.

Baker Hughes will get a cash payout of $120 million from the new firm when the deal closes, and will be owed a further $80 million, while Akastor will receive $100 million in cash and be owed another $20 million.

“The company will finance the cash consideration payable to Baker Hughes and Akastor by way of a $220 million bank facility,” they said.

Akastor shares hit a 12-month high in early trade and were up 5% at 0938 GMT, outperforming Oslo’s benchmark stock index , which was down 0.1%.

The deal is subject to regulatory approvals and is expected to close in the second half of 2021.

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