Asset sales would satisfy antitrust laws
Next month Halliburton (ticker: HAL) and Baker Hughes (ticker: BHI) plan to seek out buyers for as much as $10 billion in assets in order to avoid antitrust concerns and complete their merger, sources familiar with the matter told Bloomberg.
The divestitures will target at least four overlapping areas of business in the companies in order to win approval from the U.S. Justice Department for the $34.6 billion merger the two companies initiated in November of last year. The assets being considered in the sale include HAL’s drill bits and directional drilling operations, BHI’s cementing division, and the companies’ combined completion-tools lines.
HAL’s drill-bits business is worth as much as $2 billion, according to the informed sources. Its drilling arm, Sperry Drilling, is worth up to $3 billion, while Baker Hughes’ cementing arm could be worth up to $1 billion. The completion-tools operations could sell for as much as $5 billion. The companies will both hold special meetings on March 27 to allow shareholders to vote on the deal.
Halliburton has said it would sell businesses that account for as much as $7.5 billion in revenue for regulatory approval. HAL and BHI, the world’s second- and third-largest oilfield service companies respectively, are creating a larger entity with a broader technology portfolio to better compete against Schlumberger (ticker: SLB), which is about twice the size of the combined companies in regards to market capitalization.
The combined company will hold operations in more than 80 countries and totaled 2014 revenues of $57.5 billion. It will be based in Houston, Texas – HAL’s headquarters.
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