Halliburton Is Said to Face EU Objections to Baker Hughes Deal

(Bloomberg) -- Halliburton Co.’s troubled bid to buy oil-services rival Baker Hughes Inc. faces a formal complaint from European Union regulators as soon as this month, adding to a court fight with U.S. antitrust officials.

A statement of objections would lay out concerns about how the deal would hurt competition throughout the EU, according to two people familiar with case, who asked not to be named, because the procedure isn’t public.

The transaction, which would unite the No. 2 and No. 3 firms in the industry, already faces opposition from the U.S. Justice Department, which sued to block the deal April 6, saying it threatens to eliminate head-to-head competition in 23 products and services used in oil exploration.

The shares of Baker Hughes fell 49 cents, or 1.1 percent, to $46.01 at 11:40 a.m. in New York, after declining as much as 1.9 percent. Halliburton shares rose 43 cents, or 1.1 percent, to $40.47.

EU Antitrust Commissioner Margrethe Vestager told reporters earlier this month in Washington that she is working closely with the Justice Department. She said it was premature to talk about the next steps in her review of the deal, because the complicated transaction would have an effect on multiple markets.

Halliburton’s plans have been stalled three times by the EU and faced months of delays as regulators repeatedly sought more information about the deal. The Brussels-based commission last week set a new deadline of Aug. 11 for a final ruling on the merger.

Emily Mir, a spokeswoman for Houston-based Halliburton, and Melanie Kania at Baker Hughes, both declined to comment as did a representative for the EU.

Neither the EU statement of objections nor the U.S. lawsuit necessarily spell the end of the tie-up, which has been bogged down in regulatory reviews around the globe since it was announced in 2014. Some merger suits brought by the government are settled when companies agree to sell assets to resolve competition concerns.

Still, others vow to fight only to see their deals collapse. Halliburton and Baker Hughes said they planned to contest the case.

Halliburton agreed to buy Baker Hughes in November 2014 in a cash-and-stock deal that at the time was valued at about $35 billion. The transaction was scheduled to close last year, but has been delayed as the companies grapple with antitrust concerns in the U.S. and Europe.

The EU probe is seen as one of the most complex in recent years, with regulators identifying more than 30 product lines with potential competition problems. The EU opened an in-depth probe into the deal on Jan. 12, citing similar concerns to the U.S., that combining the second- and third-largest suppliers to oil exploration companies may impede competition and increase prices.

Halliburton would have to pay Baker Hughes a breakup fee of $3.5 billion if the bid is dropped.

Halliburton has been adding assets to the list of businesses it plans to sell to gain antitrust approval. The company plans to divest Baker’s offshore drilling-and-completions fluids division and the bulk of Baker’s completion systems, people familiar with the matter said last month. This comes on top of two other batches of overlapping business lines Halliburton pledged to sell to assuage the Justice Department’s concerns.

--With assistance from Gaspard Sebag. To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net Christopher Elser.

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