Hughes President and Chief Executive Officer Chad Deaton said in a statement the move would strengthen the company's position "as a top-tier global oilfield services company ... particularly in unconventional gas and deepwater fields."

"It will better position us to drive international growth," he said.

Critically, the deal would shift Hughes' revenue stream. In 2008, Hughes derived less than 1 percent of its revenue from pressure pumping. The merger would bump that up to more than 20 percent, in line with competitors.

Pressure pumping is becoming increasingly important as oil companies attempt to wring as much oil as they can from developed oil fields, the statement said.

In addition, BJ Services Chairman, President and CEO Bill Stewart called the proposed deal "an attractive combination for all of BJ Services' constituencies."

Shareholders of both companies must approve the merger, which would give BJ Services stockholders $2.69 cash and 0.4 shares of Baker Hughes stock for each BJ Services share they own.

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