With Stock High, 2 Holding Major Stake in Varco Plan to Cash In

Oil well drilling equipment maker Varco International Inc., its stock trading at the highest prices in almost 15 years, said Friday that it is seeking regulators’ approval for two key shareholders to sell almost 6.6 million shares of company stock.

Most of the stock to be sold, 6.3 million shares, is held by Texas oil well services giant Baker Hughes Inc.

Varco Chairman Walter B. Reinhold will be offering 250,000 shares, representing 21.2% of his stake in the company.

Varco stock was up 25 cents at $17.25 on the New York Stock Exchange when trading was halted Friday afternoon in anticipation of the stock sale announcement. The last time the stock traded above $17 a share was at the end of 1981.

At Friday’s price, the Baker Hughes holding is worth more than $100 million; Reinhold would gross $4.2 million.

Baker Hughes carries its Varco stock on its books at about $8 a share, meaning it would net about $44 million from a sale at Friday’s price.

The company obtained its 20% stake in Varco in separate transactions when Varco issued the stock in 1988 and 1990 to help pay for its acquisitions of two Baker Hughes units.

Richard Kertson, Varco’s chief financial officer, said Reinhold is selling for “personal financial planning reasons” and that Baker Hughes is selling its entire stake in Varco “because they’ve decided that now is the time to cash in on the investment they’ve been holding.”

Because this is not an initial public offering, the shares will be offered at the market price on the day of the sale. The sale could come any time “from a few days to 45 days” from now, Kertson said.

Varco said it will grant its underwriters an option to purchase up to 989,406 additional shares to cover any excess demand. CS First Boston Corp.; Howard, Weil, Labouisse, Friedrichs Inc., and Simmons & Co. International will underwrite the offering.