DOJ Reaches An Agreement With Halliburton Company (NYSE:HAL) and Baker Hughes Incorporated (NYSE:BHI)

0
762
** 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 07/13/2015 (Financialstrend) – Halliburton Company (NYSE:HAL) and Baker Hughes Incorporated (NYSE:BHI) have reached an agreement with the U.S Department of Justice over the extension of the review process of the proposed merger. The review process will now continue until November 25, 2015. The two companies remain engaged in talks with the European Commission and other competition enforcement authorities where their operations overlap.

Concerns over Monopoly Control

The deal was expected to close in the second half of the year, but because of the regulatory process, it should close on December 1, 2015. The proposed merger has already sparked criticism in a number of countries where the companies have overlapping businesses. There are concerns that the combined entity could lead to a monopoly power.

The $35 billion offer by Halliburton for Baker Hughes is currently under scrutiny by regulators in a number of countries where both companies operate. The cash and stock deal should result in a combined entity with higher revenue than Schlumberger.

Halliburton Agrees To Divest Some Businesses

Halliburton Company (NYSE:HAL) and Baker are required to comply with a number of stipulations set by the DOJ by mid-summer. The deal if approved is expected to result in an oil service behemoth, Halliburton having shown willingness to divest some of its business to get the regulatory nod.

The divestiture could see Halliburton Company (NYSE:HAL) offload businesses that generate revenues of as much as $7.5 billion. The company said in April that it would sell three of its drilling business as it looks to play safe on antitrust issues.

The merger is expected to benefit both companies as consolidation remains the only way out of the current mess in the energy sector. Crude prices are down by nearly 45% as supply continues to exceed demand. Oil exploration and production companies have seen their profit margins come under pressure resulting in a decline in demand for services offered by service providers.