Baker Hughes and Hal­libur­ton, for­mi­da­ble ri­vals for Sch­lum­berger

Financial Mirror (Cyprus) - - FRONT PAGE -

Oil field ser­vices firms Hal­libur­ton Co. and Baker Hughes Inc. an­nounced a de­fin­i­tive agree­ment un­der which Hal­libur­ton will ac­quire Baker Hughes in a cash and stock trans­ac­tion val­ued at $34.6 bln. Baker Hughes stock­hold­ers will re­ceive 1.12 shares of Hal­libur­ton stock plus $19 in cash for each Baker Hughes share for a to­tal pay­ment of $78.62 a share. The price is a pre­mium of nearly 41% to Baker Hughes’ clos­ing price on Oc­to­ber 10, which a press re­lease notes as the day prior to Hal­libur­ton’s ini­tial of­fer for Baker Hughes. That is a full month be­fore last week’s first re­port of a pos­si­ble deal.

Hal­libur­ton has agreed to di­vest busi­nesses that cur­rently gen­er­ate up to $7.5 bln in an­nual rev­enues if re­quired to do so by reg­u­la­tors and also has agreed to pay a $3.5 bln break-up fee if the deal fails to get reg­u­la­tory ap­proval. The deal is ex­pected to close in the sec­ond half of 2015. Baker Hughes stock­hold­ers will own about 36% of the sur­viv­ing company.

The merged company

will

re­tain

the Hal­libur­ton name and the Baker Hughes name will dis­ap­pear. Hal­libur­ton CEO Dave Le­sar will con­tinue as chair­man and CEO of the sur­viv­ing firm, and the board of direc­tors will ex­pand to 15, of which three will come from the Baker Hughes board.

The com­pa­nies noted that 2013 com­bined pro forma rev­enues for the two firms is $51.8 bln and that com­bined they em­ploy 136,000 peo­ple.

Hal­libur­ton ex­pects the syn­er­gies to come from “op­er­a­tional im­prove­ments, es­pe­cially North Amer­i­can mar­gin im­prove­ment, per­son­nel re­or­gan­i­sa­tion, real es­tate, cor­po­rate costs, R&D op­ti­mi­sa­tion and other ad­min­is­tra­tive and or­gan­i­sa­tional ef­fi­cien­cies.”

The com­bined firm will top in­dus­try leader Sch­lum­berger Ltd. in rev­enues, but the com­bined mar­ket cap of Hal­libur­ton will still trail Sch­lum­berger and prof­its will also fall short, at least un­til the syn­er­gies kick in.

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.