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Halliburton and Baker Hughes’ $35 Billion Merger is Dead

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Smokin Joe:
Halliburton and Baker Hughes decide to terminate merger

The world’s second- and third-largest oilfield service companies, Halliburton (ticker: HAL) and Baker Hughes (ticker: BHI), announced the termination of their proposed merger agreement. The deal, which was worth $35 billion before the crash in commodity prices and $28 million yesterday before the announcement, met with heavy resistance from the U.S. Department of Justice, which felt the deal violated anti-trust concerns.

Bill Baer, the head of the DOJ’s anti-trust division, went as far as calling the deal “unfixable” and assailed the companies for proposing “the most complicated array of piecemeal divestitures and entanglements” he had ever seen. Baer and the DOJ felt the deal would leave an unacceptable number...

More at: http://www.oilandgas360.com/halliburton-and-baker-hughes-35-billion-merger-is-dead/?utm_source=Closing+Bell+Report&utm_campaign=ad21ded1e6-Closing_Bell_RSS_Campaign&utm_medium=email

thackney:
Halliburton CEO Dave Lesar Speaks Publicly For First Time Since The Baker Deal Collapse
http://oilpro.com/post/24202/halliburton-ceo-dave-lesar-speaks-publicly-first-time-following-b
5/3/2016


--- Quote ---And the Baker Hughes indigestion hasn't killed Halliburton's M&A appetite either. Management is reviewing bolt-on acquisitions to improve technology holes in the company's portfolio.

Dave Lesar said: "We are going to invest in those product lines where we're a little bit weak and we'll look at selective acquisitions to round them out."

Jeff Miller, President, explained that Halliburton is prioritizing M&A targets that can lower the cost per BOE for customers, saying: "there will be gaps here and there that say, hey, if we can put that to work in our system to drive a differentially lower cost per BOE, those are the things we want to spend money on." Technologies or platforms that Halliburton can weave into its portfolio to reduce cost/BOE seem to be its new focus for deal making.

And Christian Garcia, acting CFO, added: "We need somewhere around $1 billion to run the company, so we're carrying more than enough cash. Our use of cash is prioritized, first, with ensuring that we have the resources to take advantage of organic opportunities as they come. Second, the bolt-on acquisitions as well as any sort of ventures that we need to make to execute the strategy, cost per BOE strategy that Jeff laid out."

After Halliburton pays the $3.5bn termination fee to Baker this week and retires $2.5bn of M&A debt, the company will have $3.6bn of cash left. Reserving $1bn for operations leaves Halliburton with $2.6bn of dry powder to chase acquisitions, plenty in this deflated market.
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IsailedawayfromFR:

--- Quote from: Smokin Joe on May 03, 2016, 05:35:05 pm ---Halliburton and Baker Hughes decide to terminate merger

The world’s second- and third-largest oilfield service companies, Halliburton (ticker: HAL) and Baker Hughes (ticker: BHI), announced the termination of their proposed merger agreement. The deal, which was worth $35 billion before the crash in commodity prices and $28 million yesterday before the announcement, met with heavy resistance from the U.S. Department of Justice, which felt the deal violated anti-trust concerns.

Bill Baer, the head of the DOJ’s anti-trust division, went as far as calling the deal “unfixable” and assailed the companies for proposing “the most complicated array of piecemeal divestitures and entanglements” he had ever seen. Baer and the DOJ felt the deal would leave an unacceptable number...

More at: http://www.oilandgas360.com/halliburton-and-baker-hughes-35-billion-merger-is-dead/?utm_source=Closing+Bell+Report&utm_campaign=ad21ded1e6-Closing_Bell_RSS_Campaign&utm_medium=email

--- End quote ---

The oil service sector is being hammered much worse than the O&G operators.  This will impact the eventual re-emergence of industry as prices rise, as that is where the new technology was birthed on horizontal drilling/completions.  Service sector developed it, and operators paid for it.

Could be a longer ride to get going again once price rises.

Smokin Joe:

--- Quote from: IsailedawayfromFR on May 04, 2016, 08:45:22 pm ---The oil service sector is being hammered much worse than the O&G operators.  This will impact the eventual re-emergence of industry as prices rise, as that is where the new technology was birthed on horizontal drilling/completions.  Service sector developed it, and operators paid for it.

Could be a longer ride to get going again once price rises.

--- End quote ---

Yes, it could. The layoffs come fast in the service sector, and small businesses tend to be crushed by loss of business, more than global companies who take a hit, but have the depth to absorb the hit and still retain key personnel to train new people when things pick back up. Consider, too, the aging pool of highly qualified individuals, some of whom will have taken work out of the sector and will consider riding that to retirement, and the reticence to reinvest on the part of those who were not prepared for the rapid decline in the sector, and the run-up in available providers could be relatively slow.

There will, however be fierce competition between existing and still operating service companies, and the constant quest for that bit of tech or technique to gain an edge on the competition.

IsailedawayfromFR:

--- Quote from: Smokin Joe on May 04, 2016, 10:20:35 pm ---Yes, it could. The layoffs come fast in the service sector, and small businesses tend to be crushed by loss of business, more than global companies who take a hit, but have the depth to absorb the hit and still retain key personnel to train new people when things pick back up. Consider, too, the aging pool of highly qualified individuals, some of whom will have taken work out of the sector and will consider riding that to retirement, and the reticence to reinvest on the part of those who were not prepared for the rapid decline in the sector, and the run-up in available providers could be relatively slow.

There will, however be fierce competition between existing and still operating service companies, and the constant quest for that bit of tech or technique to gain an edge on the competition.

--- End quote ---

Maybe you and I can ride a good ride during retirement once it perks back up.  I think thackney is still a bit too young to retire and may still have some in school.

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