Caterpillar to Honeywell Said to Eye Halliburton Energy Assets
2015-04-23 20:40:54.222 GMT
By Matthew Monks
(Bloomberg) -- The largest industrial companies in the
world, from Caterpillar Inc. to Honeywell International Inc.,
are about to get a rare chance to go big on oil.
They’re among more than half a dozen manufacturers --
including Siemens AG, Dover Corp., and General Electric Co. --
that are weighing offers for oilfield-services assets worth $5
billion to $10 billion that Halliburton Co. is preparing to
sell, people with knowledge of the matter said.
Also mulling bids are Emerson Electric Co. and Danaher
Corp., the people said, asking not to be identified discussing
private information. Halliburton and Baker Hughes Inc. are
selling up to four overlapping business lines to win regulatory
approval for their $34.6 billion deal.
The industrial players see the deal as a rare opportunity
to expand in the oil and natural gas industry in one fell swoop,
the people said. Halliburton is preparing to send offering
materials to those companies, as well as private-equity firms
and rival oilfield-services providers, in the coming weeks, the
people said.
“These are great businesses,” said Robert MacKenzie,
director of research with Iberiabank Corp.’s capital markets
division. “Once in a generation do you see industry leading
businesses come to market in an open-type sale.”
Representatives for Caterpillar, Emerson, Honeywell,
Halliburton and GE declined to comment. Spokespeople for
Siemens, Dover and Danaher didn’t return calls for comment.
DOJ Talks
First up will be the drill bits unit and another that uses
data to track and steer the direction of drills, the people
said. They’re worth as much as $5 billion in total, people with
knowledge of the matter said last month. Halliburton is also
talking with the U.S. Department of Justice about separating
parts of the companies’ cementing and completion tools
businesses, which together could fetch more than $5 billion, the
people said.
Some of the industrial companies may decide not to bid
after evaluating the assets, given the volatility in oil prices
that has sapped demand for drilling services and parts, the
people said.
Still, they have two potential advantages over buyout firms
and oilfield-services providers expected to be in the mix, the
people said. Their high credit ratings give them better access
to debt financing than private equity firms, which means they
can make higher offers while still generating good returns, one
person said.
GE Spree
Their edge over oilfield services companies that analysts
have pegged as logical bidders for Halliburton’s cast-offs --
including National Oilwell Varco Inc. and Superior Energy
Services Inc. -- comes down to competition: Halliburton doesn’t
want to give any more market share to companies that already
offer the same services, the people said. That means it would
prefer selling to a new player entering the market.
Some of the industrial companies already have oil and gas
businesses: GE’s oil unit acquired more than $10 billion in
assets over the past five years, including the $3.3 billion for
artificial-lift maker Lufkin Industries Inc. in 2013.
In a February interview, Lorenzo Simonelli, chief executive
officer of GE Oil & Gas, said he will look to make opportunistic
acquisitions through the market downturn.
Siemens agreed to buy energy equipment maker Dresser-Rand
Group Inc. for $7.6 billion last year. Honeywell provides
equipment for offshore rigs and pipeline operators, while
Caterpillar makes engines, generators and products used in
drilling and compressing gas.
Caterpillar signaled a willingness to do deals in the
energy sector in March, when an analyst asked the company about
its appetite for oil and gas takeovers at an industry
conference.
“Our balance sheet is in very good shape, so we have the
capability and the capacity to do more M&A if the right targets
present themselves” said Richard Moore, Caterpillar’s director
of investor relations, according to a transcript compiled by
Bloomberg.
For Related News and Information:
Halliburton and Baker Hughes Said to Plan April Asset Sales
Halliburton Cutting Up to 8% of Workforce Amid Oil Collapse
Top Stories:TOP<GO>
--With assistance from Shruti Date Singh in Chicago, Thomas
Black in Dallas and Richard Clough in New York.
To contact the reporter on this story:
Matthew Monks in New York at +1-212-617-8111 or
mmonks1@bloomberg.net
To contact the editors responsible for this story:
Mohammed Hadi at +1-212-617-2914 or
mhadi1@bloomberg.net
Will Wade
2015-04-23 20:40:54.222 GMT
By Matthew Monks
(Bloomberg) -- The largest industrial companies in the
world, from Caterpillar Inc. to Honeywell International Inc.,
are about to get a rare chance to go big on oil.
They’re among more than half a dozen manufacturers --
including Siemens AG, Dover Corp., and General Electric Co. --
that are weighing offers for oilfield-services assets worth $5
billion to $10 billion that Halliburton Co. is preparing to
sell, people with knowledge of the matter said.
Also mulling bids are Emerson Electric Co. and Danaher
Corp., the people said, asking not to be identified discussing
private information. Halliburton and Baker Hughes Inc. are
selling up to four overlapping business lines to win regulatory
approval for their $34.6 billion deal.
The industrial players see the deal as a rare opportunity
to expand in the oil and natural gas industry in one fell swoop,
the people said. Halliburton is preparing to send offering
materials to those companies, as well as private-equity firms
and rival oilfield-services providers, in the coming weeks, the
people said.
“These are great businesses,” said Robert MacKenzie,
director of research with Iberiabank Corp.’s capital markets
division. “Once in a generation do you see industry leading
businesses come to market in an open-type sale.”
Representatives for Caterpillar, Emerson, Honeywell,
Halliburton and GE declined to comment. Spokespeople for
Siemens, Dover and Danaher didn’t return calls for comment.
DOJ Talks
First up will be the drill bits unit and another that uses
data to track and steer the direction of drills, the people
said. They’re worth as much as $5 billion in total, people with
knowledge of the matter said last month. Halliburton is also
talking with the U.S. Department of Justice about separating
parts of the companies’ cementing and completion tools
businesses, which together could fetch more than $5 billion, the
people said.
Some of the industrial companies may decide not to bid
after evaluating the assets, given the volatility in oil prices
that has sapped demand for drilling services and parts, the
people said.
Still, they have two potential advantages over buyout firms
and oilfield-services providers expected to be in the mix, the
people said. Their high credit ratings give them better access
to debt financing than private equity firms, which means they
can make higher offers while still generating good returns, one
person said.
GE Spree
Their edge over oilfield services companies that analysts
have pegged as logical bidders for Halliburton’s cast-offs --
including National Oilwell Varco Inc. and Superior Energy
Services Inc. -- comes down to competition: Halliburton doesn’t
want to give any more market share to companies that already
offer the same services, the people said. That means it would
prefer selling to a new player entering the market.
Some of the industrial companies already have oil and gas
businesses: GE’s oil unit acquired more than $10 billion in
assets over the past five years, including the $3.3 billion for
artificial-lift maker Lufkin Industries Inc. in 2013.
In a February interview, Lorenzo Simonelli, chief executive
officer of GE Oil & Gas, said he will look to make opportunistic
acquisitions through the market downturn.
Siemens agreed to buy energy equipment maker Dresser-Rand
Group Inc. for $7.6 billion last year. Honeywell provides
equipment for offshore rigs and pipeline operators, while
Caterpillar makes engines, generators and products used in
drilling and compressing gas.
Caterpillar signaled a willingness to do deals in the
energy sector in March, when an analyst asked the company about
its appetite for oil and gas takeovers at an industry
conference.
“Our balance sheet is in very good shape, so we have the
capability and the capacity to do more M&A if the right targets
present themselves” said Richard Moore, Caterpillar’s director
of investor relations, according to a transcript compiled by
Bloomberg.
For Related News and Information:
Halliburton and Baker Hughes Said to Plan April Asset Sales
Halliburton Cutting Up to 8% of Workforce Amid Oil Collapse
Top Stories:TOP<GO>
--With assistance from Shruti Date Singh in Chicago, Thomas
Black in Dallas and Richard Clough in New York.
To contact the reporter on this story:
Matthew Monks in New York at +1-212-617-8111 or
mmonks1@bloomberg.net
To contact the editors responsible for this story:
Mohammed Hadi at +1-212-617-2914 or
mhadi1@bloomberg.net
Will Wade