Halliburton rumoured to be in talks to buy Baker Hughes

[ExtraSlow]

Not sure if this should be in the Careers section, the Current Events, or Finance. If anyone thinks it's in the wrong spot, feel free to move it.

Halliburton rumoured to be in talks to buy Baker Hughes. This would be massive.

Originally posted by Reuters, Thursday Nov 13, 2014
Baker Hughes says in talks with rival Halliburton

By Nadia Damouni

Thu Nov 13, 2014 6:59pm EST


(Reuters) - Oilfield services provider Halliburton Co and rival Baker Hughes Inc are in preliminary talks on a potential merger, Baker Hughes said in a statement on Thursday.

The statement said the discussions "may or may not lead to any transaction" but two people familiar with the matter said

Halliburton was in talks to buy Baker Hughes. Any potential deal between the two Houston-based companies could run into antitrust concerns.

"Baker Hughes Incorporated today confirmed that it has engaged in preliminary discussions with Halliburton Company regarding a potential business combination transaction," the statement said.

Halliburton declined to comment on the talks, which were first reported by Dow Jones and in The Wall Street Journal. The people familiar with the matter spoke to Reuters on condition of anonymity.

Oil prices have slid by a third since June, eroding demand for drilling services and pummeling stock prices across the energy sector. That has prompted a flurry of chatter among executives and bankers about acquisition opportunities.

A tie up between the No. 2 and No. 3 players in the services industry might allow them to better weather the downturn and resist pressure from producers to slash prices.

A potential merger would create a drilling, logistics and well services giant worth $67 billion, initially with 140,000 employees.

But the merged entity would be only half the size of industry leader Schlumberger, which has a market capitalization of $125 billion.

If a deal were struck, the companies could well have to sell assets to convince regulators they would not hurt competition, said Seth Bloom, a veteran of the U.S. Department of Justice's antitrust division now in private practice.

"The question with mergers like this is are there divestitures of submarkets that can solve the problem," Bloom said. "It's clearly not a slam dunk to approval but it's not automatic that you can't get it through. You have to drill down to see what the markets are like."

The deal is also likely to draw the scrutiny of regulators in Europe, China, Brazil and Mexico, others experts said. Arguably, the antitrust concerns would be greatest outside the United States, where there are relatively few services companies.

[ExtraSlow]

I can see regulators having some major issues with this, but I assume that's well understood by the people planning this deal (if any), and they would have a plan to carve off some major pieces to new companies, or for sale to rivals.

[themack89]

Talk about takeover of the century. :eek:

[max_boost]

Only posting because baker Hughes ordered $800 worth of chinese food from me today for lunch it was epic lol

[vengie]

Woooow!

[16hypen3sp]

Little off topic but isn't BH a really crappy company? I've heard it from a few people now.

[ExtraSlow]

Originally posted by 16hypen3sp
Little off topic but isn't BH a really crappy company? I've heard it from a few people now.
I've used them all, and they all have their moments. BH did some thing very poorly in Canada, that they had the global capability of doing very well.

Same story for SLB and HAL actually.

I don't think any of them are truly "crappy" overall. Just in certain markets and product lines.

[killramos]

More of a fact of how service companies in the oil industry are in general.

We live in a world of huge demand, where everything is expected to be done immediately.

When you do things to fast you run the definite risk of incidents, and failures. This is where the reputation comes from and then companies make a big motion of switching service or completions companies. Its circular.

As we transition into a lower capital environment you begin to see the enormous waste that many of these service companies are billing for and combine that with the number of mistakes they make well thats where these companies can be squeeexed trying to transition

As for international, outside of NA service companies are king and they do things right. In NA people aren't willing to wait or pay for things to be done right.

Thats my opinion of baker in particular and service companies as a general statement. And if you actually read what I am saying it isnt their fault. They are who we have made them to be.

[broken_legs]

Originally posted by ExtraSlow

I don't think any of them are truly "crappy" overall. Just in certain markets and product lines.

Truer words have never been spoken.

How does this merger compare in size to the SLB - SMITH acquisition? SLB is still sending all of SMITHs junk to the middle east so it dies and they can charge full LIH.

[ExtraSlow]

The SLB-Smith aquisition was an all-stock deal worth about $11 B US.

[ExtraSlow]

Was just thinking about it, in my career, I've been part of a $2 Billion corporate aquisition, a $3 billion asset sale, and now this $26 Billion aquisition (if it happens).

[killramos]

Originally posted by ExtraSlow
Was just thinking about it, in my career, I've been part of a $2 Billion corporate aquisition, a $3 billion asset sale, and now this $26 Billion aquisition (if it happens).

You work for Baker? Cool.

[jwslam]

Originally posted by ExtraSlow
Was just thinking about it, in my career, I've been part of a $2 Billion corporate aquisition, a $3 billion asset sale, and now this $26 Billion aquisition (if it happens).
Originally posted by killramos
You work for Baker? Cool.
"Part of" can be from either side of the aquisition.

[ExtraSlow]

I'm one of the sides.

[M.alex]

Originally posted by ExtraSlow
Was just thinking about it, in my career, I've been part of a $2 Billion corporate aquisition, a $3 billion asset sale, and now this $26 Billion aquisition (if it happens).

Is your net worth >$50M? If not, you're doing it wrong then.

[ExtraSlow]

I am doing it wrong.

[SKR]

Originally posted by ExtraSlow

I've used them all, and they all have their moments. BH did some thing very poorly in Canada, that they had the global capability of doing very well.

Same story for SLB and HAL actually.

I don't think any of them are truly "crappy" overall. Just in certain markets and product lines.

It seems like they drop their pants in some departments to get work in others. Like when I was at Halliburton, the drilling fluid PSL didn't seem like anything more than a way to sell cement. Sell the mud at half price so you can sell the cement at full price, and that way the cement PSL looks good and they're happy in Denver or Houston or wherever.

At least that's how it felt. I was too far from the top to see what it was actually like.

[schurchill39]

BH also shut the doors to a couple of shops in Canada and downsized other shops this year. They haven't been doing very good and from what I can tell have taken a "we don't care about the Canadian market" approach to things recently. From what I can tell its been hard to compete up here.

In other unfounded rumors possibly fueled by this whole ordeal: I hear that SLB is looking to buy one of the "smaller" Canadian pressure pumping companies to gain market share here. I haven't found anything online about this and my guess its just a little fear mongering as I work in that particular service. That will be the day I change the colour of my coveralls though...

[adamc]

Originally posted by SKR


It seems like they drop their pants in some departments to get work in others. Like when I was at Halliburton, the drilling fluid PSL didn't seem like anything more than a way to sell cement. Sell the mud at half price so you can sell the cement at full price, and that way the cement PSL looks good and they're happy in Denver or Houston or wherever.

At least that's how it felt. I was too far from the top to see what it was actually like.


This is 100% standard in every segment of the industry.

[schurchill39]

Apparently talks started a month ago then today BH decided they didn't want to.Now Halliburton is considering a hostile takeover (http://in.reuters.com/article/2014/11/15/bakerhughes-halliburton-snag-idINL2N0T500620141115)

[ExtraSlow]

Originally posted by adamc



This is 100% standard in every segment of the industry. Agreed.

[austic]

Originally posted by ExtraSlow
I am doing it wrong.
Everyone but senior management got screwed on the asset sale. Glad you got out of CNRL for hopefully someone better.

[Neil4Speed]

Originally posted by M.alex


Is your net worth >$50M? If not, you're doing it wrong then.

Did someone tell you that everyone in the company gets 7 figure golden handcuffs during a takeover? :rolleyes:

[ExtraSlow]

I think this is his way of telling me that I'm an unimportant peon. Don't worry M.alex, I get a reminder of that every two weeks.

[Feruk]

Originally posted by ExtraSlow
BH did some thing very poorly in Canada, that they had the global capability of doing very well.
I've used Baker for fracs, acid work, ESPs, and reservoir modeling services. For 4 of the 4, I found using Baker to be a mistake. The competition is cheaper and provides better equipment. Plus at one company I worked at, it was widely suspected (but never proven) that someone in procurement/VP level management was getting a kickback for using them. Sounds like a lousy deal for Haliburton.

[max_boost]

Originally posted by ExtraSlow
Was just thinking about it, in my career, I've been part of a $2 Billion corporate aquisition, a $3 billion asset sale, and now this $26 Billion aquisition (if it happens). I hope you get one of those big payouts erchrry talks about

[themack89]

Originally posted by Feruk
Sounds like a lousy deal for Haliburton.

:facepalm:

[ExtraSlow]

aaaaand, it is now confirmed. They have reached an agreement.
http://www.bloomberg.com/news/2014-11-17/halliburton-to-buy-baker-hughes-for-34-6-billion-sell-assets.html

The anti-trust considerations of this deal will be major, so I assume an actual closing date will be at least six months out, possibly more like 12.

[killramos]

Originally posted by ExtraSlow
I think this is his way of telling me that I'm an unimportant peon. Don't worry M.alex, I get a reminder of that every two weeks.

:rofl:

True Story

[Joe-G]

Time to put on my Haliburton hat :rofl:

[lasimmon]

Originally posted by Feruk

I've used Baker for fracs, acid work, ESPs, and reservoir modeling services. For 4 of the 4, I found using Baker to be a mistake. The competition is cheaper and provides better equipment. Plus at one company I worked at, it was widely suspected (but never proven) that someone in procurement/VP level management was getting a kickback for using them. Sounds like a lousy deal for Haliburton.

Unlike all those other people taking kick backs (hockey games, lunches, golf etc..)

[SkiBum5.0]

Originally posted by Feruk

I've used Baker for fracs, acid work, ESPs, and reservoir modeling services. For 4 of the 4, I found using Baker to be a mistake. The competition is cheaper and provides better equipment. Plus at one company I worked at, it was widely suspected (but never proven) that someone in procurement/VP level management was getting a kickback for using them. Sounds like a lousy deal for Haliburton.

meet the way the world works. Not a lousy deal for Halliburton. It now makes them 1/2 the size of Big Blue, and economies of scale will net them $2B in savings.

[ExtraSlow]

Little update today. Futher to rumours posted in Bloomberg a couple of weeks, ago, the WSJ has confirmed that HAL will be workng to divest its bits and Directional drilling businesses.


Originally posted by The Wall Street Journal

Halliburton Plans Sale of Three Drilling Businesses
Halliburton sees completing sale of the businesses in same time frame as the closing of the Baker Hughes deal
By Josh Beckerman April 7, 2015 4:58 p.m. ET


Halliburton Co., which is seeking regulatory approval for its roughly $35 billion purchase of Baker Hughes Inc., plans to sell three drilling business.

The three businesses are drill bits, directional drilling and its LWD/MWD businesses, which are logging while drilling and measurement while drilling. The divisions will be marketed separately, the oilfield-service company said Tuesday.

“Although we would prefer to retain these assets, we will be required to divest some of our overlapping businesses to obtain competition authorities’ approvals as anticipated when we announced the Halliburton-Baker Hughes transaction,” Halliburton said.

Halliburton expects to complete the sale of the businesses in the same time frame as the closing of the Baker Hughes deal late in the second half of 2015.

In February, the companies said they received an expected second request for additional information from antitrust regulators.

Halliburton and others in the industry have cut jobs following a sharp decline in oil prices.

In January, Halliburton reported higher earnings and revenue for its December quarter but warned that 2015 would be challenging.

[ExtraSlow]

Originally posted by New York Post
GE emerges as key player in Halliburton buyout deal
By Josh KosmanSeptember 11, 2015 | 10:32pm

General Electric could be key to Halliburton winning regulatory approval for its $35 billion buyout of rival oil-service company Baker Hughes.
The Post reported Thursday that the Department of Justice had determined that Halliburton needs to find a single buyer of assets generating about $7.5 billion of revenue to pass muster.
The most logical buyer — it might turn out to be the only candidate — is GE, which has tens of billions in cash from selling much of its financial services business, and is building its presence in oil services.
GE will bid at the right price, sources close to the company said. GE declined to comment.
On Friday, Halliburton said the DOJ had not told the company it would require the businesses to be sold to one buyer and was continuing to market the assets separately.

[Pacman]

Interesting. Many people thought GE would come in buy Weatherford.

[ExtraSlow]

Maybe they will. Hell, maybe buy both and make a true major service company.

[killramos]

http://boereport.com/2016/05/01/halliburton-and-baker-hughes-announce-termination-of-merger-agreement/

Annnnnnd its dead.


Halliburton Company (NYSE:HAL) and Baker Hughes Incorporated (NYSE:BHI) today announced that the companies have terminated the merger agreement they entered into in November 2014, effective April 30, 2016.

Not sure what this means for either of them in Calgary, but i doubt its good.

[ExtraSlow]

This is terrible for Halliburton globally. They may be able to recover from this locally, as they have a couple of product lines that were doing really great in the WCSB market. Ok, maybe three.

[vengie]

This means Baker Hughes will receive $3.5bil and will likey use that to scoop up another service company. Trican?

[killramos]

Originally posted by vengie
This means Baker Hughes will receive $3.5bil and will likey use that to scoop up another service company. Trican?

Wow i didn't know the break fee was that high. Crazy. Absolutely then seems like a no brainer, but will they end up running into the same competition act ( albeit in a different country) problems that the Baker-Halliburton deal faced?

If Baker buys Trican ~ how much of the pressure pumping and completions market will they have cornered?

Maybe i overestimate their sizes because Baker and Trican are all I have ever used for completions and intervention services at my current shop.

How do calfrac and the others measure up?

[ExtraSlow]

Keep in mind how inconsequential the Canadian market is to these multinational service companies.

Also, Baker has been incurring significant costs preparing for this merger, I doubt they'll have much of that 3.5B left over after they re-strengthen themselves.

[killramos]

Originally posted by ExtraSlow
Keep in mind how inconsequential the Canadian market is to these multinational service companies.


That means nothing to the Canadian government, even its is small potatoes to Baker if they end up controlling the Canadian market they will have a problem.

My dad is working through something similar ( different sector ) and the negotiations and requirements involved sound nuts.

[ExtraSlow]

Aaaand, both companies are up on the news. Looks to be far more than other players in the sector.

[killramos]

Originally posted by ExtraSlow
Aaaand, both companies are up on the news. Looks to be far more than other players in the sector.

Well this is a big factor in Baker being up:

http://uk.reuters.com/article/uk-bakerhughes-m-a-halliburton-idUKKCN0XT03L


Baker Hughes Inc (BHI.N) said it planned to buy back $1.5 billion (1.02 billion pound) of shares and $1 billion of debt, using the breakup fee it will receive following the collapse of its proposed buyout by Halliburton Inc (HAL.N). Baker Hughes will get $3.5 billion as part of a merger agreement, which the companies terminated on Sunday after opposition from U.S. and European antitrust regulators. The U.S. Justice Department filed a lawsuit last month to stop the $28 billion deal, arguing it would leave only two dominant oilfield services companies, with Schlumberger Ltd (SLB.N) being the other.

I guess that, at least temporarily, answers our question about what to do with their breakup fee.