The second- and third-largest oil-service firms had set a deadline for the end of April to complete the deal – once valued at $35 billion – or walk away.
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Don’t feel too badly for oilfield services giant Baker Hughes following Sunday evening’s announcement the company and its acquirer, Halliburton, had called off their $28 billion merger.
The Houston-based energy companies last month pledged to “vigorously contest” the U.S. Justice Department’s lawsuit against Halliburton’s acquisition of Baker Hughes, but the obstacles appeared too significant to surmount.
Mr Gelfand said the impact of the takeover on competition in the oil services industry would have been so wide-ranging that “no remedy could have satisfied the [legal] standard we must apply to these cases”.
Martin Craighead, chairman and CEO of Baker Hughes, said the “outcome is disappointing because of our strong belief in the vast potential of the business combination to deliver benefits for shareholders, customers and both companies’ employees”.
ValueAct Capital Management, an activist hedge fund, is the largest Baker Hughes shareholder. However, Baker Hughes might be able to cushion the blow from the merger fallout, as Halliburton is due to pay a breakup fee of $3.5 billion by May 4, 2016, as mentioned in the press release.
“Our strategy has not changed”, Halliburton Chief Executive Officer Dave Lesar told investors and analysts on a conference call Tuesday.
As a result, Halliburton recorded company-wide charges related primarily to asset impairments and severance costs of $2.1 billion after-tax, or $2.39 per diluted share, in the first quarter, vs. $192 million after-tax, or 22 cents per diluted share, in the fourth quarter.
Analysts polled by Thomson Reuters expected adjusted earnings of 4 cents a share on revenue of $4.16 billion.
“According to the complaint, however, the proposal was inadequate because it did not include full business units, withheld many critical assets and personnel, involved numerous ongoing entanglements between the merged company and the divestiture buyer and generally failed to replicate the robust competition between the parties that exists today”, it said. Visit MarketWatch.com for more information on this news.
Baker Hughes Incorporated supplies oilfield services, products, technology, and systems to the oil and natural gas industry worldwide.
“More than ever, our customers need to lower their costs and maximise production”. Restructuring will focus on well construction, including drilling services, drill bits and completions, and production services, including artificial lift and production chemicals, Craighead said.
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Baker Hughes also said it plans to cut $500 million in costs “while capitalizing on our strengths as a product innovator to create new growth opportunities”.
