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Halliburton, Baker Plan Close For December; More Asset Sales Proposed

Halliburton Co. and Baker Hughes Inc. have agreed to extend until late November an antitrust review by the U.S. Department of Justice of their $35 billion merger, and assets continue to be marketed to advance the deal.

The antitrust review, expected to be completed by Nov. 25, would be finished once "substantial compliance" with the Justice Department requests are completed, Halliburton said late Friday. The closing is now scheduled for Dec. 1.

The transaction, announced last November, would combine the world's No. 2 and No. 3 oilfield service (OFS) operators (see Daily GPINov. 17, 2014). On a pro-forma basis, the combined 2013 revenues were $51.8 billion, with 136,000-plus employees and operations in more than 80 countries. To complete the deal, the Houston-based firms are in continuing discussions also with the European Commission and other competition enforcement authorities.

As planned, Halliburton currently is marketing its Fixed Cutter and Roller Cone Drill Bits, Directional Drilling and Logging-While-Drilling/Measurement-While-Drilling businesses. In addition, the company said it has proposed selling other global units to complete the tie-up with Baker. Halliburton offered no details about what assets could be up for sale.

The partners appear "committed to do what's necessary to get it across the finish line," analysts with Tudor, Pickering, Holt & Co. (TPH) said Monday. Extending the review by the Justice Department doesn't seem out of the ordinary for this transaction, they noted. More important, the companies "look to have fully responded" to a second request for information by mid-summer, which should mean the next few weeks.

There has been concern that the sharp downturn in the OFS sector might scuttle the merger, as stock prices have plummeted. Halliburton's share price when the merger was announced was just under $50.00/share, and about midday Monday it was trading above $41.00. Baker's stock price in mid-November 2014 was close to $65.00/share, while on Monday it was trading above $60.00.

"We’d not be too worked up over a few months either side for the close, though obviously the earlier the better as the trough of the market is better time to make changes and the later the close, the more likely some modest recovery may have begun," TPH analysts said.

More details are expected next Monday when Halliburton is scheduled to deliver its second quarter results, followed by Baker on Tuesday.

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