Leading oilfield services firms Baker Hughes Inc. and
Halliburton Co. have announced the immediate termination of the
merger agreement entered into by the companies in November
In a joint statement released in May, Halliburton and Baker
Hughes reiterated their belief in the merger’s
"compelling benefits to shareholders, customers and other
stakeholders", describing the ultimate failure to secure
regulatory approval for the deal as a "disappointing
Both Halliburton and Baker Hughes, have been working with
antitrust authorities since 2014 – including the US
Department of Justice (DOJ) and European and Brazilian
antitrust authorities – to propose divestitures ahead
of the merger, but failed to gain any regulatory approvals.
Most recently, the DOJ filed a civil antitrust lawsuit at
the start of April seeking to block Halliburton’s
$34.6bn purchase of Baker Hughes, saying that the transaction
could eliminate competition, raise prices and threaten
innovation in oilfield services. "There are some deals that are
so risky and anticompetitive that they should never have made
it out of the boardroom," Bill Baer, the Assistant Attorney
General for the DOJ’s Antitrust Division, said
during a conference call. "This falls squarely in that
"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 US and abroad,"
Baker Hughes CEO, Martin Craighead, said.
"While disappointing, Halliburton remains strong,"
Halliburton’s CEO, Dave Lesar, reassured its
customers. "We are the execution company – our
strategy, technologies and service quality are focused on
helping customers maximise production at the lowest cost and
driving industry leading growth, margins and returns."
As part of the merger agreement, Halliburton was ordered to
pay Baker Hughes a termination fee of $3.5bn by Wednesday, 4
With high technological and financial barriers to entry, the
oilfield services market is dominated by only four major
Baker Hughes and Halliburton are the second and third
largest oilfield service suppliers following only market leader
Schlumberger. Weatherford is also a major supplier in the
sector. Both Halliburton and Baker Hughes are leading producers
and providers of oilfield minerals including bentonite and
Declining rig count
The US rig count declined once again in April according to
the latest figures released by Baker Hughes.
Baker Hughes reported the worldwide rig count for April 2016
at 1,424, down by 127 from 1,551 in March and down 844 from
2,268 counted in April 2015.