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Major Shareholder Confident Halliburton-Baker Merger on Track

A San Francisco-based activist hedge fund, which holds considerable stakes in Halliburton Co. and Baker Hughes Inc., told investors that it expects the mega-merger to be finalized because the partners are willing to do whatever it takes to achieve antitrust compliance.

ValueAct Capital Management in a letter to investors expressed confidence in the tie-up, which was announced a year ago (see Daily GPINov. 17, 2014). At the end of September ValueAct held more than 37 million shares, an estimated 7.64% of its portfolio, in Halliburton and more than 23 million shares, 7.03% of its portfolio, in Baker.

"In our conversations with Halliburton's management team, it is clear that they remain committed to doing whatever is necessary to close the deal," ValueAct management said. "They are far along in the process to divest multiple duplicative business lines and will offer up additional divestitures if necessary."

Without naming Halliburton, ValueAct in October had indicated in a filing that it wanted to enhance Baker's value by potentially adding a representative to the board. It also indicated that it wanted to discuss with Baker possible mergers and acquisitions, executive compensation and capital allocation to enhance its value.

There has been concern that the merger between the second and third largest global oilfield services operators might be in trouble with antitrust regulators. In late September the Houston-based companies said they would sell more businesses to complete their merger to ensure antitrust approval by the U.S. Department of Justice and other authorities (see Daily GPISept. 28).

Halliburton already plans to sell its fixed cutter and roller cone drillbits, directional drilling, logging-while-drilling/measurement-while-drilling and expandable liner hangers business units. Baker already is planning to divest its core completions business, as well as its sand control business in the Gulf of Mexico and offshore cementing businesses.

The merger originally had been set to close Wednesday (Nov. 25), but it was amended to extend the closing into 2016 "if necessary."

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