Lawsuit could spell the end for Halliburton's merger with Baker Hughes

On Wednesday, 6th April, the US Department of Justice (DOJ) filed a civil antitrust lawsuit to block the proposed merger between Halliburton and Baker Hughes.

The deal, which was announced in November 2014, was initially valued at US$35 billion. It would have seen Halliburton acquire Baker Hughes’s shares, and combine their 136 000 employees in 80 countries. However, the Justice Department now alleges that the deal would raise prices and eliminate competition.

This lawsuit is a great blow to both companies who had initially appeared confident that the deal would pass, and in a statement issued by Hallliburton on Wednesday it seems that both companies are set to vigorously contest the DOJ’s effort to halt the merger. Halliburton and Baker Hughes had already tried to appease the Justice Department’s concerns before Wednesday’s lawsuit. In order to reassure officials that enough competition would remain following the merger, the companies offered to sell assets worth US$7.5 billion. However, in the wake of the depressed oil prices, it is likely that competition will remain weak. Halliburton has already laid off thousands of workers in response; it was hoped that the deal with Baker Hughes would strengthen it against competition in a global environment currently characterised by low energy prices, and bolster it against market leading Schlumberger.

Edited from various sources by Louise Mulhall

Sources: Halliburton The Atlantic

Read the article online at: https://www.oilfieldtechnology.com/special-reports/07042016/lawsuit-could-spell-the-end-for-halliburtons-merger-with-baker-hughes/