HUGHES <HT> APPROVES MERGER WITH BAKER <BKO> An overwhelming majority of Hughes Tool Co shareholders approved a merger agreement with Baker International Corp based on revised terms that allow the companies additional time to sell a drilling bit business as required by the U.S. Justice Department. Hughes chairman William Kistler said the revised terms of the proposed consent decree also set a 10 mln dlr cap on how much funding the newly combined companies will have to spend on the disputed drilling bit business until it is sold. An earlier proposed consent decree did not establish a funding limit. The Baker-Hughes merger, which would would create a 1.2 billion dlr oilfield services company, almost fell through earlier this month when Hughes balked at terms of a proposed Justice Department consent decree that would have given the companies only three months to find a buyer for the Reed business. Baker said today it would withdraw the one billion dlr lawsuit it had filed to force Hughes to follow through with the merger. Hughes' Kistler, speaking to reporters after 85 pct of Hughes' shareholders approved the merger, said the revised terms of the agreement give the companies six months to find a buyer for the Reed drilling bit business. The previous agreement had proposed a three-month period. Kistler said the the government had also indicated it would consider granting, if necessary, an additional three-month extension to complete the sale. He said there were "several people looking" at the domestic drilling bit business. The companies, Kistler said, have also decided to voluntarily sell a Reed plant in Singapore. Kistler estimated that the merger, which should be completed in about two weeks, will result in annual cost savings of about 50 mln dlrs. He said he expects "substantial cutbacks" in the 20,000-member workforce at Baker-Hughes Inc, the name the merged company will take. Kistler said the cost savings and greater efficiencies should put the company on a profitable course. "We think that in the third or fourth quarter after the merger we should see something close to breakeven," he said. In the fourth quarter of 1986, Hughes earned 31.7 mln dlrs on sales of 215.7 mln dlrs. Baker, in its first fiscal quarter ended December 31, lost 34.2 mln dlrs on revenues of 297.7 mln dlrs.