Halliburton Pushing to Keep Baker-Hughes Deal Alive

The oilfield services supplier has taken another step to ease the concerns of regulators who fear the merger would be anticompetitive.
Matthew HellerJanuary 25, 2016

Faced with antitrust concerns over its proposed $35 billion acquisition of Baker Hughes, Halliburton said Monday it had presented an expanded list of possible asset divestitures to the U.S. Department of Justice.

The merger would combine the second and third largest suppliers of oilfield services. The plunge in oil prices has complicated the firm’s efforts to find buyers for any assets they may need to sell to comply with antitrust laws.

Halliburton and Baker Hughes agreed last year to divest as much as $7.5 billion worth of business if required by regulators. Halliburton declined to provide details of the new plan in an analysts’ call Monday, according to Bloomberg, but James West, an analyst at Evercore ISI, said the threshold for total assets sold could climb to as much as $10 billion in 2013 revenue.

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Regulators have questioned whether the buyers of any Halliburton and Baker Hughes assets would become credible rivals to the combined company. The European Commission, the EU’s top antitrust authority, said earlier this month it would open an in-depth probe into the merger after its initial inquiry revealed that the firms “seem to be close competitors, both in terms of tenders and in innovation.”

The commission “has to look closely” at the deal to ensure that “it would not reduce choice or push up prices for oil and gas exploration and production services in the EU,” Margrethe Vestager, the EU’s antitrust chief, said.

Baker Hughes and Halliburton have extended the deadline for closing the deal, first announced in November 2014, to April 30. In announcing the company’s first-quarter results, Halliburton CEO Dave Lesar said Monday it has also informally notified the European Commission and other jurisdictions of the new sale plan.

For the period ended Dec. 31, Halliburton reported a loss of $28 million, or 3 cents a share, compared with a year-earlier profit of $901 million, or $1.06 a share. It would have to pay Baker Hughes a breakup fee of $3.5 billion if the deal is scrapped.