Halliburton, Baker Hughes to sell more businesses for deal approval

Halliburton Company and Baker Hughes Incorporated announced that the companies will market for sale additional businesses in connection with Halliburton’s pending acquisition of Baker Hughes.

Rob Desai, an analyst at Edward Jones in St. Louis.

For Baker Hughes, the merger will give the company an enterprise value of about $38 billion.

Now, the review will, at the earliest, close on the later of December 15 – from the current date of November. 25 – or 30 days after the date on which the two companies fully comply with the DOJ’s second request.

Halliburton said when the deal was announced that it was willing to divest businesses that generate up to $7.5 billion in revenue, if required by regulators, but the company believed it would have to sell significantly less.

“Halliburton anticipates that the companies will complete the sales of these businesses in the same timeframe as, and the closing of the divestitures would be conditioned on, the closing of the pending Baker Hughes acquisition”, it said in a statement.

After oil prices plunged by more than half since June 2014, those assets are expected to see their sales fall to $3.9 billion this year, according to Spears & Associates, a Tulsa, Oklahoma oilfield research consultant. Baker Hughes Chairman and Chief Executive Officer Martin Craighead said the merger would be “efficient”.

Halliburton also said it received last Friday proposals from multiple interested parties for its Fixed Cutter and Roller Cone Drill Bits, Directional Drilling and Logging-While-Drilling (LWD)/Measurement-While-Drilling (MWD) businesses.

Lastly, Baker Hughes will offer the core chunk of its completions tools business, which provides equipment that helps control the flow of oil as the well is being readied for production.

The newly announced slate of divestitures is smaller than the ones previously announced, but the offshore cementing and completions businesses should attract “plenty of suitors”, investment banking firm Tudor, Pickering, Holt & Co. wrote in a note Monday.