The pending Halliburton and Baker Hughes mega merger will result in additional divestures of businesses for the approval of the US$34.6 billion deal, which is also under a three-week delay with the Antitrust Division of the US Department of Justice (DOJ).
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Image from Halliburton. |
Halliburton and Baker Hughes intend to divest several of their businesses, which include: Halliburton’s expandable liner hangers business; Baker Hughes’ core completions business that includes packers, flow control tools, subsurface safety systems, intelligent well systems, permanent monitoring, sand control tools and sand control screens; the Baker Hughes sand control business in the Gulf of Mexico, including two pressure pumping vessels; and Baker Hughes’ offshore cementing businesses in Australia, Brazil, the Gulf of Mexico, Norway, and the United Kingdom.
Halliburton is also continuing with its previously announced divestitures of its fixed cutter and roller cone drill bits, directional drilling and logging-while-drilling (LWD)/measurement-while-drilling (MWD) businesses.
The combined revenue in 2013 associated with all of the businesses intended to be divested was approximately $5.2 billion.
“The sale of these businesses will be subject to the negotiation of acceptable terms and conditions for the divestitures, the approval of the divesting company’s board of directors, and final approval of the Baker Hughes acquisition by competition enforcement authorities. Halliburton anticipates that the companies will complete the sales of these businesses in the same timeframe as, and the closing of the divestitures would be conditioned on, the closing of the pending Baker Hughes acquisition,” the two companies said in a joint statement.
Although the pending acquisition has received unconditional regulatory clearances in Canada, Kazakhstan, South Africa, and Turkey, the merger is not a done deal.
Halliburton and Baker Hughes have also amended their timing agreement with the DOJ with a three-week extension. Now, the earliest closing date is set for 15 December 2015 from the current date of 25 November 2015 or 30 days following the date on which both companies have certified final, substantial compliance with the DOJ second request. The deal’s new closing date is 16 December 2015, however the agreement also provides that the closing can be extended into 2016, if necessary.
Both companies’ stockholders showed an overwhelming response of nearly 99% and 98%, in favor of the merger in March 2015. The stock and cash merger agreement was reached in November 2014.
Halliburton is expecting the deal to create $2 billion a year in cost synergies and up to $7.5 billion in divestments.
For Baker Hughes, the merger will give the company an enterprise value of about $38 billion.
Read more:
Halliburton, Baker Hughes merger gets DOJ extension
Stockholders approve Halliburton/Baker Hughes deal
Halliburton announces Baker integration plan
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