Analyst says Smith Int. price higher than expected

NEW YORK (MarketWatch – S&P Equity analyst Stewart Glickman said Monday the $11 billion all-stock offer from Schlumberger to buy Smith International was higher than he expected. Glickman reiterated his hold rating on Schlumberger and said the exchange offer amounts to 7.6 times Smith International’s estimated 2011 earnings before interest, taxes, depreciation and amortization. “We see strategic value to Schlumberger in the acquisition, especially for deepwater and international exposure, but the purchase price…is higher than we had expected,” he said in a note to clients. The deal will hurt Schlumberger’s earnings in 2011, but will likely improve its long-term growth prospects, he concluded. (Updated to correct reference to Smith International’s EBITDA valuation in the merger.)