The U.S. Justice Department has reportedly prepared a lawsuit in order to stop Halliburton-Baker Hughes merger deal, representing the latest in a series of blows for the proposed deal by competition regulators.
The prospect of combining the world’s second and third largest oilfield services provider has raised competition concerns among oil and gas companies who are their customers.
Citing sources familiar with the matter, Reuters reported that the antitrust lawsuit could potentially prevent the deal, announced back in November 2014, and that the companies may either cancel the planned tie-up or fight the government in court.
The two sides had been discussing assets sales in order to try and save the deal, but if it falls through, Reuters stated, Halliburton will have to pay a breakup fee to Baker Hughes in the amount of $3.5 billion.
The Justice Department’s move follows a separate legal action launched on Monday against ValueAct, an investment firm, for violating pre-merger notification requirements. Namely, according to the Department of Justice, ValueAct invested over $2.5 billion in Halliburton and Baker Hughes, but failed to notify antitrust authorities, wrongly claiming no intent to influence companies’ business decisions.
According to the complaint, ValueAct purchased the shares with the intent to influence the companies’ business decisions as the merger unfolded and therefore could not rely on the limited “investment-only” exemption to HSR notification requirements. The complaint details how ValueAct used its access to senior executives of both Halliburton and Baker Hughes to formulate merger and other business strategies with the companies.
The proposed merger is also facing issues in EU as the European Commission in January opened an in-depth investigation to assess whether the proposed acquisition of oilfield service supplier Baker Hughes by rival Halliburton is in breach of the EU Merger Regulation, as it might impede effective competition.
This was followed by a suspension of a deadline for the review in February due to incomplete information provided by the companies. The Commission halted the investigation into the deal for the second time in March saying the companies had yet to provide an important piece of information.
Update: April 6, 2016 16:30 CET
The U.S. Justice Department has now officially filed a lawsuit aiming to stop the Halliburton – Baker Hughes merger. The two oilfield services suppliers plan to contest the DOJ’s allegations. Read more here: https://bit.ly/23bPicX
Offshore Energy Today Staff