Halliburton and Baker Hughes agree to merge

Halliburton and Baker Hughes have announced a definitive agreement to merge in a deal worth US$34.6 billion. The highly contentious deal saw some rather personal language used in very public terms between the bosses of the two oilfield service majors in the run-up to this announcement. The deal will see Halliburton, currently the second biggest oilfield service company in the world after Schlumberger, acquire all the outstanding shares of Baker Hughes in a stock and cash transaction. Baker Hughes will receive $78.62 per for each of its shares representing an equity value of $34.6 billion and enterprise value of $38 billion. The figures are based on Halliburton’s closing price on November 12, 2014, the day prior to public confirmation by Baker Hughes that it was in talks with Halliburton regarding a transaction. Halliburton said that it intends to finance the cash portion of the acquisition through a combination of cash on hand and fully committed debt financing. Should the deal fall through – it still faces government scrutiny on antitrust issues and stockholder consensus – Halliburton has agreed to pay a fee of $3.5 billion. But the joint Houston-Dubai headquartered firm says that it is confident that a « combination is achievable from a regulatory standpoint. » Upon the completion of the transaction, Baker Hughes stockholders will own approximately 36 per cent of the combined company. According to Halliburton, the agreement has been unanimously approved by both companies’ boards of directors.