Halliburton Co., the second biggest oilfield services provider, has agreed to buy No. 3 Baker Hughes Inc. in a deal valued at $34.6 billion, taking advantage of plunging crude prices to set up the biggest takeover of a U.S. energy company in three years.
With the agreement, Bloomberg reports, Halliburton eliminates a chief rival and expands its business portfolio and reach at a time when falling oil prices have pushed the industry into a downturn. The merger, though, will likely draw intense antitrust scrutiny, especially where North American businesses overlap.
“We have the best antitrust counsel available on this,” Halliburton Chairman and Chief Executive Officer Dave Lesar said on a conference call with reporters this morning. “We are absolutely confident that we’re gonna get this thing done.”
Whether it ultimately gets done or not, the deal may be just the start of big energy takeovers as oil prices slump.
Crude has plunged to a more than four-year low amid a U.S. supply glut. That’s making top energy companies, from equipment makers to oil explorers, cheaper for buyers that have the capital to survive and the confidence to strike. Halliburton, a $47 billion provider of oilfield services and equipment, approached Baker Hughes about a combination several weeks ago, a time when the target was trading near its cheapest price in more than a year. The forces that drove them together will likely spur on other dealmaking as well.
“Low oil prices always triggered industry consolidation,” Fadel Gheit, an analyst at Oppenheimer, tells Bloomberg. It’s “survival of the fittest. Larger companies view this correction as a window of opportunity to make acquisitions that would improve their own operation and generate synergy benefits.” Read the full story.
