Oilfield services giant Baker Hughes swooped in and bought Chart Industries for $13.6 billion on July 29, outbidding and canceling a planned merger of equals between Chart and Flowserve that was previously announced in early June.

After a massive wave of consolidation from the oil and gas producers the last two years, the fragmented services sector is now shrinking as well as the top players buy up more of the midsized players. Baker Hughes is one of the so-called Big Three services companies globally along with Halliburton and industry leader SLB, which just closed its nearly $8 billion acquisition of ChampionX in July.

Baker Hughes (No. 155 in the Fortune 500) is making a big bet on the booming liquefied natural gas (LNG) export business—as well as on data center growth—in which Chart specializes on equipment manufacturing and services. Chart operates 65 manufacturing locations with over 50 service centers globally. Baker Hughes gains scale and further diversifies in growth industries through the deal.

Baker Hughes’s all-cash deal offers a 22% premium on Chart’s shares, valuing Chart at more than $9.4 billion after its July 28 closing market cap value of $7.7 billion. The $13.6 billion enterprise value includes the assumption of Chart’s debt. Chart’s stock shot up by more than 15% in early trading, while Baker dipped by about 1%.

Chart determined the Baker bid represented a “superior proposal” to its pending merger with Flowserve as the two services companies were planning to combine to scale up and compete with bigger competitors. Flowserve will receive a $266 million termination payment.

Source: Fortune