Baker Hughes announced that rival Halliburton Co. is planning on nominating candidates to replace Baker’s entire board of directors after talks of a potential buyout stalled.
According to Baker Hughes, Halliburton refused to raise its first offer to acquire the company, which the board of Baker Hughes deemed as not “adequate” enough.
The company said that by trying to replace its board of directors Halliburton is increasing the pressure into accepting the initial offer.
Baker Hughes CEO Martin Craighead said in a statement:
“Baker Hughes is disappointed that Halliburton has chosen to seek to replace the entire Baker Hughes board rather than continue the private discussions between the parties,”
Halliburton will be attempting to replace Baker Hughes’s board at the company’s annual meeting in April.
If a deal goes through the combined company would be one of the most prominent oil services companies in the world, with larger revenue than the current biggest oil services company, Schlumberger Ltd.
Talks about a deal began after Baker Hughes received an offer from Halliburton last month, at a time when a drop in oil prices has affected the stock prices of both companies. Over the past five months oil prices have dropped by 31 percent to a four year low.
Would the combined company have the power to increase prices for its services though? Not likely, especially as there is growing competition around the world, with service companies quickly emerging in China, India, and South Korea.
As a result there is increasing pressure on oil service companies to cut costs.
However, a merger would allow the combined company to compete against Schlumberger and cut costs.