Federal Suit to Stop Deal Between two Oilfield Services Firms

57
Source:   —  April 07, 2016, at 0:04 AM

The government argues that the $35 billion deal would lead to higher prices and less innovation in the business of helping energy companies drill for oil and gas.

The Justice Dept is suing to stop Halliburton from buying oilfield-services rival Baker Hughes, the latest effort by the Obama administration to obstruct mergers that it believes enrich corporations but hurt consumers.

The government argues that the $35 billion deal would lead to higher prices and less innovation in the business of helping energy companies drill for oil and gas.

The Justice Dept filed a lawsuit in federal Ct in Delaware, charging that the deal would get rid of head-to-head contest in twenty-third markets for products and services including drill bits, fluids and expertise in drilling horizontal wells. Those and other innovations have helped spur a renaissance in U. S. energy production.

Halliburton Co. is the world'south second-biggest services company in the oil business and Baker Hughes Inc. is third. Combining them would create a duopoly with market boss Schlumberger Ltd., the Justice Department said.

Halliburton and Baker Hughes countered in a joint statement that their deal would make better contest by creating a more flexible, innovative services company.

"The transaction will allow customers with access to high quality and more efficient products and services, and an opportunity to reduce their cost per barrel," the companies said.

The companies announced their map to combine in November two thousand fourteen, shortly after oil prices began to fall due to a global oversupply of crude. The glut has slowed demand for drilling services. Both companies have laid off thousands of workers, and their shares have lost about one-third of their value.

Helper Attorney Common Bill Baer, head of the Justice Department'south antitrust division, said oilfield services is a cyclical business and its companies grow and shrink with market conditions. "It'south not a justification for an anticompetitive merger to say, 'We're not doing as much business as we used to,'" he said.

Halliburton has proposed spinning off billions of dollars in assets to obtain the deal approved — it could owe Baker Hughes a $3.5 billion breakup fee if the deal fails. Baer dismissed the offer, calling it a "grab bag" of the companies' less-valuable holdings.

Latest year saw a record of more than $5 trillion in corporate mergers and takeovers, topping two thousand seven as the biggest year ever for deals, according to Dealogic. Speaking to antitrust lawyers in Washington, Attorney Common Loretta Lynch said the deals are also bigger and more complex.

"This represents a remarkable shift toward consolidation and it presents unique challenges to federal enforcers in our work to support markets that serve not just top executives and majority shareholders, but every American," Lynch said. Consolidation, particularly in industries that already have few competitors, raises serious concern about higher prices, lower quality and less innovation, she said.

Lynch cited deals that were stopped or abandoned in the face of regulatory objections including a Comcast-Time Warner tie-up, AT&T'south attempt to purchase T-Mobile, and a combination of Chicken of the Sea and Bumble Bee.

"To even start the merger process in these instances was small more than a waste of corporate and taxpayer dollars," she said.

Shares of both companies rose in afternoon trading. Halliburton rose $2.15, or 6.3 percent, to $36.56 while Baker Hughes shares rose $3.27, or 8.3 percent, to $42.63.

———

Koenig reported from Dallas.

READ ALSO
eleven People Who Have Died Due to Exploding Takata Air Bags

eleven People Who Have Died Due to Exploding Takata Air Bags

She was killed when the two thousand two Honda Civic she was driving crashed on March thirty-one. Fourteen automakers have recalled about twenty-four million vehicles in the U.

48
Experts Expect Corporate Tax Inversions to Survive New Rules

Experts Expect Corporate Tax Inversions to Survive New Rules

S. tax man'south reach. But recent, aggressive federal actions that discouraged Pfizer Inc.'south combination with another drugmaker, Allergan PLC, won't stop all so-called inversions, or deals that finish with a company relocating to another country...

58
Mike Antonovich, Tear Down That Sign!

Mike Antonovich, Tear Down That Sign!

That'south because it was the site of Nazi rallies and a Nazi youth camp during the one thousand nine hundred thirty. In fact, the park'south genuine title is Crescenta Valley County Park and it's owned and operated by LA County.

33
What We Think About People Who Wear Create Up to the Gym

What We Think About People Who Wear Create Up to the Gym

Athleisure wear is officially high fashion these days and is gregariously discussed. But when it comes to create up at the gym, well that'south a whole other story.

74