Baker Hughes Can Recoup Stock Losses Sooner With Deal: Real M&A
2014-11-14 20:03:43.61 GMT
(For a Real M&A column news alert: {SALT REALMNA <GO>}.)
By Tara Lachapelle
Nov. 14 (Bloomberg) -- Halliburton Co. may give Baker
Hughes Inc. shareholders a quicker way to recoup the more than
$10 billion in value they’ve lost since July.
Baker Hughes, the third-largest oilfield-services company,
said it’s in preliminary talks to merge with No. 2 Halliburton
and combine forces amid an industry downturn caused by plunging
oil prices. Before news of the talks became public, Baker Hughes
shares had slipped 32 percent from this year’s high of $75.35
apiece, wiping out more than $10 billion of market value.
Analysts were predicting that it’d take as long as 12 months to
return to that level. Now that the company is in takeover talks,
shareholders may be made whole a lot sooner.
The timing is good for Halliburton, too. The $46 billion
company is swooping in right as crude oil trades at the lowest
in more than four years and acquisition candidates remain cheap.
Halliburton could pay $70 to $75 a share with a mix of cash and
stock -- as much as 26 percent higher than Baker Hughes’ price
today -- and it would give a boost to 2016 cash flow, according
to Sterne Agee & Leach Inc. The cost savings “should be
massive,” says Simmons & Co.
The drop in crude “served as an opening,” Ted Harper, a
Houston-based fund manager at Frost Investment Advisors LLC,
which oversees $10 billion and owns shares of Halliburton and
Baker Hughes, said in a phone interview. “As a shareholder of
both, I am in favor of it for a number of reasons, not the least
of which is it creates a global enterprise which will have the
intellectual property, technical expertise and services
portfolio to compete” with market leader Schlumberger Ltd.
For Related News and Information:
Halliburton-Baker Hughes Deal Would Face ‘Pretty Deep’ Scrutiny
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Halliburton, Baker Hughes Consider Merger Amid Industry Downturn
NSN NF09IH6JIJV3 <GO>
Fracking Boom Spurs Demand for Sand, Clouds of Dust: Commodities
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Real M&A columns: NI REALMNA <GO>
Top deal stories: DTOP <GO>
To contact the reporter on this story:
Tara Lachapelle in New York at +1-212-617-8911 or
tlachapelle@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Elizabeth Wollman
2014-11-14 20:03:43.61 GMT
(For a Real M&A column news alert: {SALT REALMNA <GO>}.)
By Tara Lachapelle
Nov. 14 (Bloomberg) -- Halliburton Co. may give Baker
Hughes Inc. shareholders a quicker way to recoup the more than
$10 billion in value they’ve lost since July.
Baker Hughes, the third-largest oilfield-services company,
said it’s in preliminary talks to merge with No. 2 Halliburton
and combine forces amid an industry downturn caused by plunging
oil prices. Before news of the talks became public, Baker Hughes
shares had slipped 32 percent from this year’s high of $75.35
apiece, wiping out more than $10 billion of market value.
Analysts were predicting that it’d take as long as 12 months to
return to that level. Now that the company is in takeover talks,
shareholders may be made whole a lot sooner.
The timing is good for Halliburton, too. The $46 billion
company is swooping in right as crude oil trades at the lowest
in more than four years and acquisition candidates remain cheap.
Halliburton could pay $70 to $75 a share with a mix of cash and
stock -- as much as 26 percent higher than Baker Hughes’ price
today -- and it would give a boost to 2016 cash flow, according
to Sterne Agee & Leach Inc. The cost savings “should be
massive,” says Simmons & Co.
The drop in crude “served as an opening,” Ted Harper, a
Houston-based fund manager at Frost Investment Advisors LLC,
which oversees $10 billion and owns shares of Halliburton and
Baker Hughes, said in a phone interview. “As a shareholder of
both, I am in favor of it for a number of reasons, not the least
of which is it creates a global enterprise which will have the
intellectual property, technical expertise and services
portfolio to compete” with market leader Schlumberger Ltd.
For Related News and Information:
Halliburton-Baker Hughes Deal Would Face ‘Pretty Deep’ Scrutiny
NSN NF1JRJ6KLVRN <GO>
Halliburton, Baker Hughes Consider Merger Amid Industry Downturn
NSN NF09IH6JIJV3 <GO>
Fracking Boom Spurs Demand for Sand, Clouds of Dust: Commodities
NSN NF00DX6TTDS3 <GO>
Real M&A columns: NI REALMNA <GO>
Top deal stories: DTOP <GO>
To contact the reporter on this story:
Tara Lachapelle in New York at +1-212-617-8911 or
tlachapelle@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Elizabeth Wollman