The European Union (EU) suspended the deadline for its review of Halliburton’s US$34.6 billion pending acquisition of Baker Hughes last week, about a month after the EU opened an in-depth investigation to find out if the merger would impede effective competition.
 |
|
Image from Halliburton. |
The deadline extension was given to the two US-based companies due to the failure to provide important information, and may push the regulator’s decision on the merger past the 23 June deadline.
"The European Commission has requested additional information as part of its ongoing review process, and Halliburton and Baker Hughes intend to provide the additional information as expeditiously as possible. Requests for additional information are part of the usual post-filing process. The suspension of the formal review period is standard procedure where additional time is needed beyond the Commission’s deadline in order to respond fully to the Commission’s request," Halliburton said in a statement.
"Halliburton has presented its divestment plan to the European Commission and will make a formal offer of remedies in the near future to address the Commission’s concerns. The companies continue to work constructively with the Commission and other competition enforcement authorities that have expressed an interest in the proposed transaction. Halliburton remains focused on closing the transaction as early as possible in 2016," the company continued.
Last month, the EU opened an in-depth investigation into the merger, to assess whether the proposed acquisition of Baker Hughes by rival Halliburton would impede effective competition in breach of the EU Merger Regulation.
“The Commission has to look closely at this proposed takeover to make sure that it would not reduce choice or push up prices for oil and gas exploration and production services in the EU. Efficient exploration and production of oil and gas resources within the EU form an important element of our Energy Union strategy in terms of ensuring security of supply," Commissioner Margrethe Vestager, in charge of competition policy, said in January.
The EU’s concern of the takeover is that it would bring together the world's second and third largest oilfield service suppliers, thus eliminating one of the three current main global competitors: Halliburton, Baker Hughes and market leader Schlumberger.
“The opening of an in-depth inquiry does not prejudge the final result of the investigation. The Commission now has 90 working days, until 26 May 2016, to take a final decision,” the EU said.
In response, Halliburton and Baker Hughes said that the decision is a normal step in the Commission’s review process, and the views expressed by the Commission at this stage are preliminary only.
“Although the Commission was kept informed of the remedies that Halliburton has proposed to the US Department of Justice (DOJ), Halliburton did not offer remedies during Phase I, as it believes that offering remedies during Phase II will facilitate a more efficient review. Halliburton expects to offer a substantial remedies package that it believes will address any substantive competition concerns,” the two companies said in January.
In December, the merger took another hit as the timing agreement with the DOJ expired without reaching a settlement or the DOJ initiating litigation at this time to block their pending transaction.
To date, the merger has received regulatory clearances in Canada, Colombia, Ecuador, Kazakhstan, South Africa and Turkey.
In November, Halliburton offered five tranches of senior notes worth $7.5 billion, to use cash to fund a portion of the pending merger with Baker Hughes.
In September, both companies announced they would divest several of their businesses for the approval of the merger.
Read more:
DOJ delays Halliburton, Baker Hughes merger
Halliburton raising billions for Baker Hughes merger
Subscribe
