Investment firm pays record fine for violations during Baker Hughes-Halliburton merger

ValueAct Capital, an investment firm, has agreed to pay a $11 million settlement for violating the premerger reporting violations related to the now failed Halliburton-Baker Hughes merger.

World’s second and third largest oilfield services providers Halliburton and Baker Hughes in November 2014 said they were planning to merge in a deal valued at $35 billion.

The U.S. justice department said on Tuesday that, following the merger plan announcement, ValueAct bought over $2.5 billion of Halliburton and Baker Hughes voting shares without complying with the HSR Act’s notification requirements.

According to a complaint filed on April 4, 2016 in the U.S. District Court for the Northern District of California, ValueAct acquired these shares „with the intent to influence the companies’ business decisions – including decisions related to the merger – and therefore could not rely on the limited “investment-only” exemption to the HSR Act’s notification requirements.”

The HSR Act definition by the Department of Justice says that the act imposes notification and waiting period requirements for transactions meeting certain size thresholds to ensure that such transactions undergo premerger antitrust review by the department and the Federal Trade Commission.

ValueAct has been reported to have used its access to senior executives of both Halliburton and Baker Hughes to attempt to influence the companies’ proposed merger and other aspects of their businesses. Halliburton and Baker Hughes abandoned their proposed merger on May 2.

Halliburton and Baker Hughes abandoned their proposed merger on May 2, 2016, after the Antitrust Division sued to block it in U.S. District Court for the District of Delaware.

As part of the settlement announced by the U.S. Department of Justice, ValueAct agreed to pay a record $11 million.

The highest fine previously paid for an HSR violation was $5.67 million. ValueAct is also enjoined from relying on the “investment-only” exemption when it intends to influence, or is considering influencing, certain basic business decisions, including those relating to merger and acquisition strategy, corporate restructuring, and the company’s pricing, production capacity, or production output, the Department of Justice said.

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