Halliburton bid for Baker Hughes scuppered by regulators

Halliburton’s failed $28 billion bid for rival Baker Hughes, which was abandoned by the two companies on Sunday, faced insurmountable objections from competition regulators, the US Department of Justice has said.

David Gelfand, deputy assistant attorney-general in the antitrust division of the Department of Justice, told reporters that the agreed deal, which would have brought together the world’s second-largest and third-largest oil services companies, was “not fixable” by proposed remedies such as selling some business lines.

The US administration’s tough stance raises questions over Halliburton’s pursuit of Baker Hughes, and in particular over its promise during the takeover talks in November 2014 to pay a $3.5 billion break fee if the deal collapsed.

It had been clear that the takeover was in trouble since last month, when the Department of Justice filed a legal action to block it.

Investors reacted positively to the confirmation that it was dead, with Halliburton’s shares rising more than 2 per cent to $42.27 in morning trading in New York. Baker Hughes shares fell almost 4 per cent to $46.93.

The chief executives of the two companies said in statements on Sunday that the difficulties they faced in securing approvals from regulators meant they were forced to abandon the deal.

The break fee, the second-largest ever paid, will be sent to Baker Hughes by Wednesday.

Baker Hughes said on Monday morning it would use some of its windfall to buy back $1.5 billion in shares and $1 billion in debt.

Loretta Lynch, US attorney-general, described the decision to abandon the deal as “a victory for the US economy and for all Americans”.

Mr Gelfand said the impact of the takeover on competition in the oil services industry would have been so wide-ranging that “no remedy could have satisfied the [legal] standard we must apply to these cases”.

He added that the Department of Justice had received “extreme statements of concern” from dozens of companies and more than 100 individuals worried about the deal.

In a court filing last month, the department identified 23 markets it said raised particular concerns about competition. For some products and services, such as offshore cementing and drilling fluids, the deal would have left Halliburton and its larger rival Schlumberger sharing more than 90 per cent of the market.

– Copyright the Financial Times Ltd