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Halliburton to Sell 3 Businesses for Baker Hughes Deal - Analyst Blog
Oilfield service behemoth Halliburton Company HAL has found three businesses to dispose as part of its mega-merger deal with Baker HughesBHI . Halliburton had been asked by the U.S. Department of Justice to sell some of the overlapping business units as a prerequisite for the merger. (Read:Halliburton, Baker Hughes to Jointly Sell About $10B Assets )
The company has selected its Fixed Cutter and Roller Cone Drill Bits, Directional Drilling and Logging-While-Drilling/Measurement-While-Drilling businesses for sale.
The company added that although it prefers to retain these businesses, nevertheless, it is selling the assets to comply with the terms of the BHI merger. Halliburton further stated that the sale would not be finalized until final approval has been received for the Baker Hughes merger.
If things move as planned, the company expects to close the sale in the second half of this year, in the same time frame as the Baker Hughes deal.
The Halliburton-Baker Hughes merger was confirmed last November. (Read:Halliburton-Baker Hughes Mega-Merger: Deal Sealed at $35B ) The combined entity would become the world's second-biggest provider of oilfield services, after Schlumberger Ltd.SLB .
The merger would increase the breadth and depth of the product portfolio of the combined entity, thus increasing leverage. Moreover, the company expects cost synergies from the merger to aid financials, considering that major upstream players are cutting capital spending in this weak pricing market.
Houston, TX-based Halliburton is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial, and government sectors.
On the other hand, Baker Hughes is also a major oilfield service firm providing an array of services to the global oil and gas industry.
Currently, both Halliburton and Baker Hughes carry a Zacks Rank #5 (Strong Sell). A better-ranked player from the broader energy sector, Western Refining, Inc. WNR , sports a Zacks Rank #1 (Strong Buy).
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