Halliburton’s proposed acquisition of Baker Hughes, valued at $35 billion, has hit a stumbling block as the U.S. Department of Justice is not convinced the companies have done enough to address the DOJ’s Antitrust Division’s competitive concerns.
According to a joint statement issued by the two companies, they expect that their timing agreement with the Antitrust Division of the U.S. Department of Justice (DOJ) will expire without reaching a settlement or the DOJ initiating litigation at this time to block their pending transaction.
The two oilfield services providers said: “The DOJ has informed the companies that it does not believe that the remedies offered to date are sufficient to address the DOJ’s concerns, but acknowledged that they would assess further proposals and look forward to continued cooperation from the parties in their continuing investigation.”
In a statement issued on Tuesday, the companies said that over the last year, they’ve responded to “numerous DOJ requests for information, producing millions of pages of documents, providing numerous written submissions in response to specific questions, and participating in multiple meetings with the DOJ.”
The companies also pointed to the fact that, early in the process, Halliburton proposed to the DOJ a “substantial divestiture package that would facilitate the entry of new competition in markets in which products and services are being divested.”
“Both companies strongly believe that the divestiture package, which recently was significantly enhanced to address the DOJ’s specific competitive concerns, is more than sufficient to address concerns raised by competition authorities, including the DOJ,” Halliburton and Baker Hughes said in a joint statement.
This latest development has forced Halliburton and Baker Hughes to delay the closing of the transaction at “no later than April 30.”
The companies said they intend to continue their discussions with the DOJ, and remain focused on completing the transaction as early as possible in 2016, but said there is no guarantee that an agreement with the DOJ or other competition authorities will be reached.
Awaiting response from Australia
Halliburton’s acquisition of Baker Hughes has yet to be approved by the Australian Competition and Consumer Commission (ACCC) as well. The commission in October delayed its final decision on the acquisition until December due to competition concerns. The ACCC is expected to make the final decision on December 17, 2015.
The proposed acquisition is also being considered by competition authorities in a number of jurisdictions, including the US, the European Union, India and China. The proposed merger has received regulatory clearances in Canada, Colombia, Ecuador, Kazakhstan, South Africa, and Turkey.
To remind, Halliburton in November 2014 said it had reached definitive agreement with Baker Hughes under which Halliburton will acquire all the outstanding shares of Baker Hughes in a stock and cash transaction.