Halliburton/Baker Hughes: The U.S. DOJ's Merger Investigation and Challenge

May 01, 2016

Halliburton announced its intention to acquire Baker Hughes for nearly $35 billion in November 2014. At the time, the two companies acknowledged that the proposed combination of the second and third biggest oilfield services providers would draw significant antitrust scrutiny, but expressed confidence that they would be able "to get this thing done." As a sign of its commitment, Halliburton agreed to divest up to $7.5 billion in revenues to secure antitrust approval, and to pay a reverse breakup fee of $3.5 billion to Baker Hughes if the deal could not be completed.

The parties notified the transaction in numerous jurisdictions, including not only the United States and the European Union, but also Australia, Brazil, and China as well. At the time the deal was announced, the parties expected the transaction would close within approximately a year. However, on April 6, 2016, nearly eighteen months later, the Antitrust Division of the United States Department of Justice ("DOJ") filed a lawsuit seeking to block the merger in federal district court. In the DOJ's press release announcing the lawsuit, Assistant Attorney General Bill Baer called the deal "unfixable." And while Halliburton and Baker Hughes vowed to "vigorously contest" the DO.T's efforts to block the deal, either party was free to terminate the deal less than a month later if all regulatory approvals had not been secured. Finally, on May 1, 2016, Halliburton and Baker Hughes jointly announced that they had terminated their merger agreement and were abandoning their proposed combination.

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