Halliburton to acquire Baker Hughes in $34.6bn deal

Halliburton plans to finance the deal through a combination of cash on hand and debt financing. Mira Oberman / AFP

Halliburton will acquire rival Baker Hughes in a $34.6 billion deal, in one of the largest US energy industry takeovers.

Halliburton, the world’s second biggest oilfield services contractor and No 3 Baker Hughes, have a large presence in the UAE, from where they service major oil and gas projects throughout the Arabian Gulf.

Baker Hughes shareholders will receive 1.12 Halliburton shares plus $19 in cash for each share owned, the pair said in a joint statement.

Halliburton plans to finance the deal through a combination of cash on hand and debt financing. It is expected to lead to annual savings near $2bn.

The combining of the industry’s No 2 and No 3 oil services firms will create a combined entity about half the size of Schlumberger, the global market leader.

But it could also pave the way for more regional players come to the forefront.

“There are pros and cons,” said Jim Pendergrass, general manager of IPR Egypt, an exploration company. “You’re cutting down the number of prime companies that provide a service, but there is the potential for a mid-size company to grow.”

The deal, which is likely to attract intense anti-trust scrutiny, comes as the tumbling price of oil threatens energy projects worldwide as well as the earnings of the contractors that service them.

Global crude oil prices have slipped from more than $100 a barrel in June to less than $80 on excess supply and weak demand growth.

“When the dust settles, this will be very hard on the other top service companies as Halliburton Baker will cover all the services that they didn’t offer as individual companies,” said a manager from a rival contractor who did not want to be identified.

The deal was disclosed before the start of regular trading in New York. Baker Hughes stock surged as much as 16 per cent in early New York trade while Halliburton fell by about 9 per cent.

* With agencies