Wed, Apr. 6, 10:42 AM
- Baker Hughes (BHI +5.3%) is downgraded to Hold from Buy with a $43 price target, cut from $78, at Deutsche Bank, which expects shares to remain relatively range bound during any litigation process concerning the Halliburton (HAL +4.8%) merger.
- Although BHI and HAL will have a strong case to fight the DoJ lawsuit, the odds of the merger closing are "a coin flip at best," Deutsche Bank says
- The firm lowers its 2016 EPS estimate for BHI to a $0.42 loss from its earlier outlook for a $0.37 loss, and cuts its 2017 EPS estimate to $1.20 from $1.60, citing challenges BHI would face as a stand-alone company.
- Deutsche Bank maintains a Buy rating on HAL while lowering its price target to $40 from $53, as the company likely would be on "extremely strong footing” even if the deal falls through
- "If anything, the lack of distractions after well over a year of merger related activities as well as investors currently on the sidelines coming in could actually benefit [HAL] in the short-term,” the firm says.
- Now read It's official: DoJ files lawsuit to block Halliburton from buying Baker Hughes
Wed, Apr. 6, 10:12 AM
- Halliburton (HAL +5.2%) and Baker Hughes (BHI +5.2%) move higher following official news that the U.S. Justice Department has filed a civil antitrust suit seeking to block their $35B merger deal, confirming earlier reports.
- The DoJ alleges the HAL-BHI merger, which would combine the no. 2 and no. 3 oil services companies, threatens to eliminate competition, raise prices and reduce innovation in the oilfield services industry.
- The companies say they will "vigorously contest" the DoJ action, and that the combination would provide customers with access to high quality and more efficient products and services, and an opportunity to reduce their cost per boe.
- Now read Halliburton: ValueAct really is the mullet
Tue, Apr. 5, 2:25 PM
- Baker Hughes (BHI -5.5%) sinks to its lows of the day before rebounding a bit following media reports that the Justice Department is poised to file a lawsuit to stop its merger with Halliburton (HAL +1%).
- Bloomberg says the DoJ plans to file the lawsuit as soon as this week, claiming it violates antitrust laws by eliminating competition between the firms.
- Analysts at Evercore ISI say BHI shares could fall into the low $30s if the deal breaks apart, citing employee turnover, the cannibalization of its equipment at the onset of the downturn, and general disorder within the company that would cause revenue growth and margin improvement at a standalone BHI to lag its peers when the upcycle resumes.
- The government’s view of the deal appears to have been previewed yesterday in a court filing when the DoJ said the merger "threatens to substantially lessen competition in numerous markets."
- Now read Halliburton: Beware
Mon, Apr. 4, 2:19 PM
- The Justice Department files a civil suit against the ValueAct Capital Management hedge fund for failing to tell the U.S. government about more than $2.5B in stock purchases in Halliburton (HAL -3%) and Baker Hughes (BHI -5.5%) after the oil companies announced their $35B planned merger in 2014.
- The DoJ says ValueAct's purchase was a pre-merger notification violation of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with the intent to influence the companies business decisions.
- The violation “allowed ValueAct to become one of the largest shareholders of both Halliburton and Baker Hughes, without providing the government its statutory right to notice and prior review of the stock purchases,” the DoJ says.
- Now read NY Post: DoJ leaning against Halliburton-Baker Hughes deal
Mon, Apr. 4, 8:53 AM
- Baker Hughes (NYSE:BHI) -2.2% premarket following a NY Post report that Halliburton (NYSE:HAL) is making a last-ditch bid to save their proposed merger but the Justice Department is leaning against it.
- The DoJ has not made a final decision on whether to file a lawsuit to block the deal, but it could announce its opposition as soon as this week's American Bar Association annual antitrust conference in Washington, according to the report.
- HAL is on the hook to pay a $3.5B break-up fee to BHI if the deal falls apart; BHI also could walk away from the deal at the end of April - and might do so - to collect the fee if the DoJ does not act by that time, the report says.
- Regulators reportedly have asked HAL to sell assets with ~$10B in revenue, which it is struggling to do after the collapse in oil prices; GE is said to be the only company willing to buy some of the assets, with Weatherford (NYSE:WFT) out of the bidding.
- Now read Halliburton and Baker Hughes: Is it time to cut losses?
Wed, Mar. 23, 10:14 AM
- Total (TOT -0.7%) CEO Patrick Pouyanne is the latest energy chief to oppose Halliburton’s (HAL -1.5%) bid to buy Baker Hughes (BHI -1.2%), telling Bloomberg at the Scotia Howard Weil Energy Conference, "Obviously when you have less competition in service providers, I’m not in favor."
- Other oil companies have complained to regulators about the proposed tie-up: Chevron's (CVX -1.6%) Brazil unit said the deal could reduce to two from three the number of large service providers for certain products for drilling and completing wells, such as completion tools and cementing services.
- The deal was stalled again by the European Commission on Monday, as HAL and BHI continue to face regulatory hurdles on both sides of the Atlantic.
Mon, Mar. 21, 7:37 AM
- Halliburton's (NYSE:HAL) plan to acquire Baker Hughes (NYSE:BHI) faces further delay after European Union antitrust regulators halt their investigation into the deal for the second time.
- The European Commission says the companies have yet to provide an important piece of information.
- The EU merger authority opened an in-depth probe into the deal on Jan. 12, citing concerns that combining the world's second- and third-largest suppliers to oil exploration companies may impede competition and increase prices.
Tue, Mar. 8, 2:13 PM
- European Union antitrust enforcers say they have received further information from Halliburton (HAL -2.7%) and Baker Hughes (BHI -2.1%), and will decide by July 11 whether to approve the $35M merger of the two U.S. oilfield services providers.
- The European Commission had suspended its investigation pending receipt of the information.
- U.S. antitrust regulators also are examining the bid which has secured approval in Canada, Colombia, Ecuador, Kazakhstan, South Africa and Turkey.
Mon, Mar. 7, 6:49 PM
- Offshore drillers such as Seadrill (SDRL) staged a spectacular rebound last week, but Wells Fargo analysts Judson Bailey and his team suspect the group has come too far too fast.
- Although the firm says it remains constructive on the prospects of a long-term recovery in oil prices and in North American spending, it advises against chasing the short-covering induced rally and believes most offshore drillers have swung from fairly valued to overvalued.
- Wells says it prefers a balance of North American market share winners such as Baker Hughes (NYSE:BHI) and Halliburton (NYSE:HAL) along with select higher beta names such as U.S. Silica (NYSE:SLCA), Nabors Industries (NYSE:NBR) and Patterson-UTI (NASDAQ:PTEN) as a way to play a North American recovery.
- It's still "a game of survival" in offshore drilling, Barclays' David Anderson says, not expecting improvement in the downward trajectory of offshore upstream spending over the next two years, even if oil moves back above $50/bbl by year-end.
- Barclays is “extremely cautious” on offshore drilling stocks, with the firm seeing the most potential downside to Underweight-rated Transocean (NYSE:RIG), Diamond Offshore (NYSE:DO) and Noble Corp. (NYSE:NE)
Mon, Feb. 29, 9:54 AM
- The DoJ is pushing for Halliburton (HAL -0.9%) to agree to even more divestitures before it moves to approve the pending merger with Baker Hughes (BHI -1.9%), NY Post reports.
- HAL, which already has said it would sell assets that accounted for $7.5B in 2013 revenue, has reached a "breaking point," according to the report, which cites one source who predicts HAL would not be able to meet the DoJ's request.
- HAL is in a position of weakness, and potential buyers of its assets - speculation centers around GE (GE +0.3%) and Weatherford (WFT +0.9%) - are in a strong bargaining position, the report says.
Mon, Feb. 22, 7:53 AM
- The European Union has halted its scrutiny of Halliburton's (NYSE:HAL) proposed takeover of Baker Hughes (NYSE:BHI) because it says the companies failed to provide some details of the $35B deal.
- The EU says the move is a standard procedure on merger investigations which is activated when companies fail to provide any requested information, bit it could mean that a decision on the merger is extended past the existing June 23 deadline.
- The EU review was held up last year by four months after regulators rejected the companies’ initial filing as incomplete.
Fri, Feb. 19, 12:34 PM
- Halliburton (HAL -1.2%) likely will need to sell more assets than initially planned to gain Australia's approval for its merger with Baker Hughes (BHI -0.8%), an Australian competition lawyer familiar with the case tells CTFN.
- According to the lawyer, the critical issue for HAL is finding an alternate buyer that will take a bundle of divested assets to be a stronger competitor across various markets.
- The Australian regulator was due to decide on the deal on Dec. 17 but delayed the decision indefinitely.
- The merger also is awaiting clearance from Brazil, China, India and the European Commission.
Fri, Feb. 19, 6:43 AM
- Price target of $54 (implied upside 28.5%).
- "Diversified service companies are the best positioned to weather the current commodity cycle and come out stronger on the other side. While large cap companies have always taken share in the downturn, the winners in this cycle not only need scale but also innovative product and process capabilities to improve productivity and increase customer returns. With capex budgets in free fall and customers, competitors, and partners all razor focused on surviving, there should be a natural progression to minimize counterparty risk, which should lead to even further market share gains. BHI is the third largest oilfield service company in the world and its proposed merger with HAL creates a formidable international competitor for SLB."
- Firm still believes the proposed merger with Baker Hughes will be consummated. "However, the arb spread has been steadily rising and currently stands at over 25%. We would expect management to immediately cancel the transaction if there were material obstacles to a successful outcome. Obviously, this would be an opportune time to spend $3.5 billion on rebuilding your business and rewarding your employees. Customer concerns over competition are likely the greatest risk to regulatory approval, but we see the same customers funneling business to BHI to ensure a viable third option to Halliburton and Schlumberger."
- Firm suggests investors "embrace" the oil-market volatility and buy on short-term dips, "becoming more aggressive with the severity of the pullback."
- See also: Baker Hughes: Low Oil Prices Are A Risk To The Pending Merger (Feb. 8)
Tue, Feb. 16, 6:57 PM
- George Soros, who has warned of a repeat of the 2008 financial crisis but this time with China as the focus of most problems, exited stakes in several energy-related companies and took a position in Pfizer (NYSE:PFE) during Q4.
- According to a 13-F filing, the Soros fund disclosed it had exited stakes in Chevron (NYSE:CVX), Chesapeake Energy (NYSE:CHK) and NRG Energy (NYSE:NRG), and reduced its position in Dow Chemical (NYSE:DOW); Soros bought ~685K shares in Baker Hughes (NYSE:BHI), which is merging with Halliburton (NYSE:HAL), as well as 50.7K shares in Kinder Morgan (NYSE:KMI).
- Soros also closed his stake in Olin Corp. (NYSE:OLN) and cut his stake in Vista Outdoor (NYSE:VSTO), and took a position valued at $216M in Synchrony Financial (NYSE:SYF), which was spun off from GE.
- Overall, the value of Soros’ holdings fell to $6.05B as of Dec. 31, from $6.61B at the end of Q3.
Tue, Feb. 9, 11:59 AM
- Halliburton (HAL -4.3%) plans to divest Baker Hughes' (BHI -1.7%) offshore drilling and completions fluids division and the bulk of BHI’s completion systems, adding more assets to the list of businesses it plans to sell to appease antitrust regulators, Bloomberg reports.
- HAL already had agreed to sell BHI’s core completions business, which provides equipment for controlling the flow of oil as it is readied for production, and has decided to sell most of the rest of BHI’s related completions operations at the behest of regulators, according to the report.
- HAL's acquisition of BHI was scheduled to close last year but has been delayed to no later than April 30 as the companies seek to resolve antitrust concerns in the U.S. and abroad.
Mon, Feb. 8, 3:52 PM
- Baker Hughes (BHI -4.3%) is downgraded to Equal Weight from Overweight with a $47 price target at Morgan Stanley, which notes that the North American rig count is entering a free fall phase with further contractions expected in the near future.
- The firm points to growing risks related to the pending deal between BHI and Halliburton (HAL -1.1%), and believes the market is not pricing in the necessary risk associated with a potential failed deal.
- BHI's weak 4Q results raise concern around the company’s ability to execute as a standalone company, Morgan Stanley says.
Baker Hughes, Inc. is a supplier of oilfield services, products, technology and systems to the worldwide oil and natural gas industry. It also provides industrial and other products and services to the downstream refining, and process and pipeline industries. The company's oilfield products and... More
Sector: Basic Materials
Industry: Oil & Gas Equipment & Services
Country: United States
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