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Baker Hughes Inc. (BHI)

  • Fri, Mar. 27, 1:00 PM
    • More than 98% of voting shareholders from both companies approve the $34.6B megadeal for Halliburton (HAL -0.4%) to acquire Baker Hughes (BHI -0.2%).
    • The combination of the two oilfield services giants is not expected to close until H2 of this year after going through the regulatory process and the sales of some business units and assets by both companies.
    • Both companies have been downsizing sharply, citing the oil crash rather than the merger; HAL is cutting up to 6.5K jobs from its 80K global headcount while BHI is shedding 7K of its nearly 60K jobs.
  • Fri, Mar. 20, 8:49 AM
    • Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI) plan to begin seeking buyers in April for as much as $10B in assets the companies need to sell in order to complete their merger, Bloomberg reports.
    • The companies are said to be planning to unload at least four batches of overlapping business lines - including HAL’s drill bits and directional drilling operations and BHI’s cementing division - to win approval from the U.S. Justice Department for their $34.6B merger.
    • HAL’s drill bits business should be worth as much as $2B, its drilling arm could go for as much as $3B, and BHI’s cementing arm could fetch $1B, sources say.
  • Tue, Feb. 17, 12:48 PM
    • ValueAct Capital has acquired ~30M shares in Halliburton (HAL +0.6%) alongside its activist holdings in Baker Hughes (BHI +0.4%), ~3.5% of HAL’s outstanding shares, Bloomberg reports, as it strongly backs the agreed merger of the two oilfield services providers.
    • ValueAct disclosed in a Jan. 16 filing it owned ~22M shares in BHI, a 5.1% stake; by buying into both sides, it is betting nearly $3B that cost and tax savings will strengthen the combined company amid turmoil in the energy industry and position it to benefit from a recovery.
    • Amid volatile energy prices, BHI consistently has traded below the $78.62 price when the HAL deal became public.
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  • Tue, Feb. 10, 6:31 PM
    • Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI) say they received a second request for more information from U.S. antitrust regulators related to the proposed merger of the oilfield services companies.
    • HAL and BHI say the notice was expected but will delay the deal’s closing until 30 days after both companies have complied with the request.
    • The deal has been expected to face stiff scrutiny from the Justice Department because the two companies have overlapping business units not only in the U.S. but also in Asia and Europe.
  • Wed, Jan. 21, 6:56 PM
    • Commenting on the proposed merger between Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI), Morgan Stanley thinks the oil industry downturn may help HAL overcome antitrust hurdles, as weak oil prices make it harder to argue that market share power will translate into pricing power.
    • The weaker market also is likely to increase the value of the $2B in cost synergies HAL expects to achieve from the deal, given its much more depressed earnings figures, the firm adds.
    • Stanley lowers its earnings estimates for HAL but maintains its stock price valuation of $50/share.
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  • Dec. 23, 2014, 10:58 AM
    • Halliburton (NYSE:HAL) yesterday disclosed details of its sometimes-tense courtship of Baker Hughes (NYSE:BHI), showing that the companies had to bridge a $3.3B gap before reaching agreement for HAL to acquire its smaller rival for cash and stock that valued BHI at $34.6B.
    • BHI wanted $36.1B in stock and cash, which was 10% above HAL’s initial offer of $32.8B, and the companies eventually met in the middle during final, over-the-weekend negotiations.
    • Separately, an email yesterday from BHI CEO Martin Craighead to all employees did not mention layoffs but noted serious business concerns, saying pricing pressure on its products and services will intensify next year, and "market conditions will demand tough decisions from us in the months ahead.”
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  • Dec. 5, 2014, 8:18 AM
    • Halliburton (NYSE:HAL) appoints CFO Mark McCollum to oversee the joint integration team and take the title of chief integration officer for its pending $35B acquisition of Baker Hughes (NYSE:BHI).
    • From BHI's end, Belgacem Chariag, president of global products and services, will lead the effort.
    • The integration process is expected to begin after the merger closes in 2015; the deal is expected to face significant antitrust hurdles as regulators look closely at the combination of the world’s no. 2 and no. 3 oilfield service firms.
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  • Nov. 21, 2014, 12:31 PM
    • Halliburton's (HAL +2.4%) takeover of Baker Hughes (BHI +1.3%) will create an oilfield services powerhouse in North Dakota with more than half of the cementing market and a leading position in fracking, Reuters reports.
    • In the Williston Basin, the combined company will control 53% of the market to line a new well with cement to prevent leaks, as well as 36% of the market for fracking and 35% of the market for directional drilling, according to the data.
    • The North Dakota market share projections for the combined company will be of interest to competitors and regulators, as the deal is expected to face stiff antitrust hurdles and receive close scrutiny from regulators in the U.S. and Europe.
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  • Nov. 18, 2014, 6:48 PM
    • Halliburton’s (NYSE:HAL) $34.6B buyout of Baker Hughes (NYSE:BHI) has caused HAL shares to plunge 12% since the deal was announced Monday, the worst two-day performance for an acquirer’s stock this year; on average, a company announcing a deal has seen its stock pop 3.1% on the news.
    • But analysts say the deal may present game-changing opportunities for a few small and mid-cap oilfield services firms with enough cash on hand to buy a chunk of HAL's expected divestments without diluting their stock or damaging their credit rating.
    • Tudor Pickering Holt's Jeff Tillery speculates that Forum Energy Technologies (NYSE:FET), National Oilwell Varco (NYSE:NOV) and GE would be interested in HAL's manufacturing businesses that may come up for bid, while Superior Energy Services (NYSE:SPN) and Frank's International (NYSE:FI) might want certain services-oriented businesses.
    • Weatherford (NYSE:WFT) would seem like a logical buyer of some assets and could make it happen with a mix of cash and stock, but RBC's Kurt Hallead thinks HAL might not want to cooperate with a company that could essentially become what Baker Hughes was.
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  • Nov. 18, 2014, 3:19 PM
    • Baker Hughes (BHI -1.7%) would be required to pay Halliburton (HAL -0.4%) a $1B termination fee if the merger agreement is terminated, according to a just-released SEC filing.
    • Meanwhile, analysts continue to come out positive on the deal, with BofA Merrill saying today that adding BHI would help fill the artificial lift and chemicals gaps in HAL’s portfolio and add greater scale internationally that would enhance fixed cost absorption.
    • HAL would face a $3.5B termination fee if the deal falls through.
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  • Nov. 18, 2014, 12:37 PM
    • Halliburton's (HAL -0.1%) decision to purchase Baker Hughes (BHI -0.1%) was not driven by current low oil prices but by current conditions in the industry, and that "a bigger, stronger integrated company was what was needed to compete in this marketplace," CEO Dave Lesar tells CNBC.
    • Responding to a WSJ analysis that the deal's value for shareholders will have to come from a higher multiple down the line, Lesar said he believes HAL's multiple will indeed increase; he expects the deal to be accretive on a cash flow basis one year after the deal closes, and plans for HAL to buy back shares with proceeds from interests it expects to divest in order to win approval from anti-trust regulators.
    • The CEO says he spoke to its largest customers and they unanimously liked the deal, and adds that the energy industry can weather the current low oil price market so long as prices settle for a while.
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  • Nov. 17, 2014, 7:11 PM
    • The 56% premium Halliburton (NYSE:HAL) is paying for Baker Hughes (NYSE:BHI) is the largest of any merger in the past two decades worth more than $20B that targeted a U.S. company, so it’s little wonder that HAL shareholders sent the stock plunging 10% today even as most analysts reacted favorably to the deal.
    • For HAL investors, the deal’s benefits will have to come from the stock being rewarded with a higher multiple down the line, as the bigger company shows it can compete more effectively; with antitrust scrutiny and falling oil prices to navigate first, that's going to take a while.
    • BHI’ shares closed near $65, ~17% below HAL’s offer, with tells S&P Capital that the market views antitrust hurdles as significant; if the deal goes through, the merged firm and Schlumberger (NYSE:SLB) combined could have 70%-90% of the market in some service areas, according to the American Antitrust Institute.
    • Even if the two companies can close the deal and find the promised $2B/year in cost synergies, analysts are still concerned about volatile commodity prices; also, "market share losses and execution challenges have plagued [HAL] in the past and could be an overhang going forward," a Susquehanna analyst says.
  • Nov. 17, 2014, 3:59 PM
    • In the wake of Halliburton's (NYSE:HAL) $34.6B offer for Baker Hughes (NYSE:BHI), it appears the next hot sector for M&A action is energy: More consolidation is likely, given the weakness for stocks in the oilfield services subsector, low interest rates, and as a drop in demand for oil increases cutthroat pricing competition.
    • Speculation is running rampant as investors try to figure out who is next in an industry that is sure to undergo some more consolidation; some names identified as possible candidates include Kodiak Oil and Gas (NYSE:KOG), Marathon Oil (NYSE:MRO), Northern Oil and Gas (NYSEMKT:NOG), Anadarko Petroleum (NYSE:APC), Pioneer Natural Resources (NYSE:PXD).
    • GE could go after National Oilwell Varco (NYSE:NOV) to show it is serious about the energy industry after last year’s purchase of pumpmaker Lufkin, Royal Bank of Canada says, and Oppenheimer says even BP could be an acquisition candidate.
    • But Morgan Stanley does not see offshore drillers getting in on the action, as larger players like Diamond Offshore (NYSE:DO), Transocean (NYSE:RIG) and Seadrill (NYSE:SDRL) are still addressing dividend concerns while smaller companies such as Atwood Oceanics (NYSE:ATW) and Pacific Drilling (NYSE:PACD) still trade close to replacement value.
  • Nov. 17, 2014, 12:58 PM
    • Halliburton (HAL -9.8%) must pay a $3.5B breakup fee if its deal for Baker Hughes (BHI +10.3%) falls through, ~10% of the $34.6B deal value, far higher than the usual ~4% paid by U.S. acquirers this year, according to data compiled by Bloomberg.
    • The fee could be viewed as a barometer of the regulatory risk HAL faces, but it is also a sign that HAL is confident it will successfully navigate that risk.
    • Once combined, HAL and BHI would dominate the $25B U.S. market for onshore fracking, and unseat rival Schlumberger (SLB +0.6%) in several key lines of business.
    • Investors may be misreading the situation, says FBN Securities' head of merger arbitrage Kathy Renck, who believes a 10% breakup fee is not out of line in a situation with known antitrust issues.
  • Nov. 17, 2014, 10:39 AM
    • Halliburton (HAL -7.2%) and Baker Hughes (BHI +12.7%) say they have already identified several potential buyers for the businesses they may have to sell off amid antitrust issues, as the two oil services companies agree to a $34.6B deal.
    • In a conference call this morning, HAL CFO Mark McCollum said the company is looking at divesting businesses with up to $7.5B in revenue, but said the company doesn’t believe the sales will hurt the financial benefits of the deal.
    • CEO Dave Lesar said the deal will boost HAL’s capabilities and technology offerings in unconventional shale plays, in deepwater oil fields and in mature fields, and BHI's deepwater technology aimed at spotting oil through thick rock will help expand market share.
    • The companies said they see $2B in annual cost synergies, mostly from operational improvements in North America.
  • Nov. 17, 2014, 6:59 AM
    • The stock and cash agreement for $34.6B values Baker Hughes (NYSE:BHI) at $78,62 per share as of the close prices on November 12 (the day before news broke of a possible deal). Baker Hughes owners will receive $19 in cash plus 1.12 Halliburton shares for each share of BHI they own.
    • Upon closing, Baker Hughes stockholders will own about 36% of the combined company.
    • Halliburton expects annual cost synergies of nearly $2B, and that the purchase will be accretive to cash flow by the end of the first year after closing, and accretive to EPS by the end of year two. The deal is expected to be consummated in 2015 H2.
    • A conference call to discuss is set for 8 ET.
    • Source: Press Release
    • Previously: Halliburton goes hostile on Baker Hughes
    • BHI +16.1% premarket to $69.50, HAL -2.4% to $53.75
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Company Description
Baker Hughes Inc operates in the oilfield services industry. It provides products and services for drilling and evaluation of oil and gas wells, completion and production of oil and gas wells, fluids and chemicals and reservoir technology.