He added that the Department of Justice had received “extreme statements of concern” from dozens of companies and more than 100 individuals anxious about the deal.
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FILE – In a November 18, 2014 file photo, Halliburton Chairman, President and CEO David Lesar, third from right, rings the New York Stock Exchange opening bell.
On April 6, the department filed suit in order to block the merger of the two power companies.
WASHINGTON (AP) – Two companies crucial to the business of US energy exploration, Halliburton and Baker Hughes, have abandoned their planned merger in the face of opposition by regulators who said it would hurt competition.
Analysts at Tudor Pickering Holt said there were no surprises in the earnings report, and they see no reason to change their view of the company “given its premier position in North American completion services heading into what we believe will be a USA well completions-led oilfield service industry recovery starting up later this year”. The tie up between the two oilfield services giants would have led to intense competition in global markets as it would have created a tough rival against Schlumberger, the leading oil field services provider in the US. Gelfand said the department heard from dozens of companies and more than 100 individuals, although he declined to identify the companies and did not detail their concerns.
Halliburton will pay Baker Hughes a $3.5 billion breakup fee by Wednesday as a result of the deal falling apart.
The Obama administration has blocked or altered some 130 mergers in recent years over anti-competitive concerns. We’ll get a better idea of where Halliburton stands when the company holds its earnings call, but analysts say it looks like both the storied companies will be able to survive independently, the NYT reports.
For Halliburton, some analysts had already concluded that the deal wasn’t such a good one because it would have been forced to sell billions in assets during a deep slump in the services business. 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.
The company estimated last month that North American spending on drilling and well completion would fall by 50% in 2016, worse than 2015’s 40% drop.
After rumors about potential termination of Baker Hughes Incorporated (NYSE:BHI) – Halliburton Company (NYSE:HAL) merger floated across the market recently, Halliburton announced yesterday that the deal has been called off. The company will also implement a cost-cutting plan aimed at $500 million in savings by the end of 2016.
Halliburton recently announced that it would cut up to eight percent of its global workforce in response to crashing oil prices.
Both companies are reeling from the crushing force of rock-bottom oil prices that have hammered the profits of their key customers, exploration and production companies.
Monday, Baker Hughes said it was “taking immediate steps” to remove those previously uncuttable costs and was also “evaluating broader structural changes” to further reduce expenses and improve efficiency.
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Shares of Baker Hughes fell 2 percent Monday in NY trading to $47.39.
