Antitrust Officials Raise Concerns Over Halliburton Company (NYSE:HAL) – Baker Hughes Incorporated (NYSE:BHI) Merger

By
Rebecca Harrison
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942
** FILE ** A Halliburton complex in far Southwest Houston is seen in this July 17, 2006, file photo. The oil services giant will soon shift its corporate headquarters from Houston to the Mideast financial powerhouse of Dubai, the company's chief executive announced Sunday, March 11, 2007. (AP Photo/Pat Sullivan, File)

Dallas, Texas 07/23/2015 (Financialstrend) – Halliburton Company (NYSE:HAL) push to acquire Baker Hughes Incorporated (NYSE:BHI) for $34.6 billion has reportedly hit a snag. This is after antitrust regulators raised concerns over the kind of impact the combined company will have on the sector. Enforcement officials remain concerned that the merger could substantially hurt competition as the combined entity could wield too much power.

Antitrust Officials Concerns

Halliburton Company (NYSE:HAL) has already shown its willingness to divest some of its assets as it tries to persuade regulators that the deal poses no danger to competition. However, government officials remain concerned that even on the divestiture of the assets the combined company will still be powerful hindering a fair playing ground.

The agency has not yet made a final decision on the matter, but the raised concerns could result in a legal battle if it decides to halt the deal.  Two people familiar with the matter say that the unit has appointed experienced litigator John Read to oversee the review. Halliburton Company (NYSE:HAL) is seeking to acquire Baker Hughes as a means of expanding its technology portfolio, which could help it compete better against industry leader Schlumberger.

Break Up Fee at Stake

Halliburton and Baker Hughes stand to lose up to $2 billion in cost savings should the deal be blocked as they continue to slash their expenses after a 50% plunge in oil prices. Halliburton Company (NYSE:HAL) will also incur an additional charge on being forced to pay a breakup fee that is 10% of the deal’s value, should the regulators block the deal.

Halliburton Company (NYSE:HAL) is already looking for potential buyers of some of its assets that generate as much as $7.5 billion in annual revenue. The company also remains engaged in talks with regulators about what other businesses it may need to divest to get the Greenlight on the deal.

 The Department of Justice has already agreed to extend the review process with the two companies remaining confident of merging by December 1

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