Halliburton and Baker Hughes merger agreement has been terminated

Oilfield services giants Halliburton and Baker Hughes announced that they have terminated the merger agreement they entered into in November 2014.

Many analysts had forecast the merger would collapse amid widespread opposition from regulators who believed that the tie-up would be bad for competition in the oil-field services business.

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The Justice Department filed a lawsuit to block the deal on April 6, claiming that the merger would eliminate head-to-head competition in as many as 23 product lines.

US antitrust division chief Bill Baer told reporters in April that the deal posed a “serious” threat to competition and “wasn’t fixable.” “I have never seen one that poses so many antitrust problems in so many markets,” Baer said at the time. “Our lawsuit should surprise no one.”

The US Justice Department welcomed today’s news: “The companies’ decision to abandon this transaction – which would have left many oilfield service markets in the hands of a duopoly – is a victory for the U.S. economy and for all Americans,”

Attorney General Loretta E. Lynch said: “This case serves as a stark reminder that no merger is too big or too complex to be challenged.”

Termination of the merger is the best course of action, Halliburton CEO said

“While both companies expected the proposed merger to result in compelling benefits to shareholders, customers and other stakeholders, challenges in obtaining remaining regulatory approvals and general industry conditions that severely damaged deal economics led to the conclusion that termination is the best course of action,” said Dave Lesar, Chairman and Chief Executive Officer of Halliburton.

“While disappointing, Halliburton remains strong. We are the execution company – our strategy, technologies and service quality are focused on helping customers maximize production at the lowest cost and driving industry leading growth, margins and returns.”

Martin Craighead, Chairman and Chief Executive Officer of Baker Hughes, said:

“Today’s outcome is disappointing because of our strong belief in the vast potential of the business combination to deliver benefits for shareholders, customers and both companies’ employees,”

“This was an extremely complex, global transaction and, ultimately, a solution could not be found to satisfy the antitrust concerns of regulators, both in the United States and abroad. As we turn the page on this chapter, I want to thank our customers for their patience and continued loyalty over the past 18 months.”

Halliburton will pay Baker Hughes the termination fee of $3.5 billion by Wednesday, May 4, 2016.

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