Service firms market assets in quest for merger OK

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.

Halliburton and Baker Hughes Inc. announced plans Monday to sell off additional businesses to gain regulatory approval for their $35 billion merger.

Halliburton had previously marketed its Measurement-while-Drilling (MWD)/Directional Drilling and Logging-while-Drilling (LWD) and Fixed Cutter and Roller Cone Drill Bits businesses for sale. If antitrust regulators continue to push for more divestitures, and as the companies move closer to the deadline they set for completing their merger, “I think that’s when you’ll start to see them at least explore getting rid of a few of their more bread-and-butter lines”.

Whether the proposed divestitures pass muster with all of the regulatory agencies involved hasn’t been determined, Halliburton noted. On Friday, the company received proposals from several potential buyers for each, the company said in a statement.

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.

Baker Hughes will strip its center consummations business, sand control business in Mexico and its offshore solidifying businesses in Australia, Brazil, the Gulf of Mexico, Norway and the United Kingdom. Total revenues from all the businesses planned for divestiture were $5.2 billion in 2013, the companies said.

The timing agreement with DOJ also has been amended to extend the earliest closing date by three weeks to December, 15 from the current date of November 25, or 30 days following the date on which the companies have substantially certified compliance with DOJ requests.

Baker on Monday said it now plans to divest its core completions business, which includes packers, flow control tools, subsurface safety systems, intelligent well systems, permanent monitoring, sand control tools and sand control screens.

“We think offshore cementing and completions are both attractive businesses with plenty of suitors”, analysts at Tudor Pickering Holt & Co. wrote Monday in a note to investors.