Monday, December 23, 2024

Halliburton Bids for Baker Hughes

Posted by November 17, 2014

Halliburton Co will buy Baker Hughes Inc for about $35 billion in cash and stock, creating an oilfield services behemoth to take on market leader Schlumberger NV as falling oil prices threaten to erode demand.

The merger is widely expected to raise anti-trust concerns and Baker Hughes shares, at $69.50, were trading well short of the offer of $80.69 per share, based on Friday's close.

Halliburton shares were down 3 percent at $53.45 premarket.

Halliburton said on Monday that if required, it was ready to divest businesses that generate up to $7.5 billion in revenue, although it believed regulators would ask for "significantly less".

Halliburton said the offer was worth $78.62 per Baker Hughes share, based on Halliburton's closing on Nov. 12, when it was first disclosed that the companies were in talks.

Under the terms of the deal, Baker Hughes shareholders will get 1.12 Halliburton shares plus $19 in cash for every Baker Hughes shares held.

On a pro-forma basis the combined company had 2013 revenue of $51.8 billion, more than Schlumberger's $45.3 billion.

The combined company is expected to save nearly $2 billion a year in costs.

The acquisition will add to Halliburton's cash flow by the end of the first year after closing, expected in the second half of 2015, and to earnings by the end of the second year.

Halliburton's Chief Executive, Dave Lesar, will lead the combined company.

Credit Suisse and BofA Merrill Lynch are Halliburton's financial advisers, while Goldman, Sachs & Co is advising Baker Hughes.

Baker Botts L.L.P. and Wachtell, Lipton, Rosen & Katz are Halliburton's legal counsel, while Davis Polk & Wardwell LLP and Wilmer Cutler Pickering Hale and Dorr LLP are serving Baker Hughes.


Reporting by Swetha Gopinath

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