European regulator halts scrutiny of $35-bn Halliburton-Baker Hughes merger
22 March 2016
The European Union antitrust regulators have stopped their investigation for the second time into the $35-billion merger between Halliburton Co and Baker Hughes, saying that the oilfield services providers have yet to provide an important piece of information.
"Once the missing information is supplied by the parties, the clock is re-started and the deadline for the Commission's decision is then adjusted accordingly," European Commission (EC) spokesman Ricardo Cardoso said in an email to Reuters.
The EC has already rejected the proposed merger once, but the companies quickly re-applied, but without offering any concessions, which made the EC to launch an in-depth second phase investigation to the deal, which could last until late May.
The decision to probe deeper came after the EC said it sees potential competitive concerns in more than 30 product and service lines, both onshore and offshore.
But Halliburton had in January offered divestitures to the US Department of Justice of selling assets of both companies that had combined 2013 revenue of $5.2 billion.
The assets offered for sale include Halliburton's expandable liner hangers business; Baker Hughes's packers, flow control tools and subsurface safety systems; Baker Hughes's sand control business in the Gulf of Mexico; and its offshore cementing businesses in Australia, Brazil, the Gulf of Mexico.
Halliburton plans to divest its fixed cutter and roller cone drill bits, directional drilling and its logging while drilling and measurement while drilling businesses.
Halliburton said in November 2014 that it would acquire Baker Hughes In a friendly deal for about $34.6 billion, that would create a merged entity worth $67 billion. (See: Halliburton to acquire rival Baker Hughes for $34.6 bn)
The takeover faced regulatory scrutiny since a tie up between the No 2 and No 3 oil services giants would attract antitrust concerns in several countries where both companies operate.
Both are giants in the oilfield services providing services with expertise ranging from drilling wells, hydraulic fracturing / fracking, production and reservoir consulting, formation evaluation to pressure pumping.
The merger between the two Houston-based companies could challenge market leader Schlumberger and end competition between the two decades-old rivals in the oil field service business.
A merged company would hold around 52 per cent, while Schlumberger would hold 14 per cent of the global market of completion equipment, a broad category that includes an array of tools needed to prepare wells for production.
The EC had earlier said that the merger would leave only Schlumberger as a competitor in the EU, which could "lead to less choice and potentially higher prices for customers.''
The deal has already been approved by regulators in Canada, Colombia, Ecuador, Kazakhstan, South Africa and Turkey, but still requires approval from the US, European Union, Brazil, and Australia.