Halliburton-Baker Hughes Stalled a Third Time by EU

(Bloomberg) -- Halliburton Co.’s bid to buy oil-services rival Baker Hughes Inc. was stalled for a third time by the European Union as the companies continue to face regulatory hurdles on both sides of the Atlantic.

In a re-run of a similar delay last month, the European Commission said Monday it stopped the clock on the review because it wasn’t provided with key data about the deal. Halliburton already faced months of delays after last July’s EU rejection of an initial merger filing because crucial details were missing.

“To comply with merger deadlines, parties must supply the necessary information for the investigation in a timely fashion,” Ricardo Cardoso, an EU spokesman, said in an e-mailed statement. “Failure to do so will lead the commission to stop the clock. ”

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.

Self-Imposed Deadline

The companies previously set a self-imposed deadline of April 30 to close the deal. Halliburton would have to pay Baker Hughes a breakup fee of $3.5 billion if the bid is dropped.

"Halliburton is working to provide the additional information as expeditiously as possible," said Emily Mir, a spokesperson for Halliburton, in an e-mail.

“If the review extends beyond April 30, 2016, the merger agreement does not terminate automatically,” she said. “The parties may continue to seek the commission’s approval or one of the parties may terminate the merger agreement after April 30, 2016.”

Halliburton shares fell as much as 1.3 percent in New York trading and were down 0.7 percent at 10:36 a.m. local time.

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.

‘Very Complicated’

The EU move may be just because it’s a “very complicated, data-heavy investigation,” said Anne MacGregor, a competition lawyer at Cadwalader, Wickersham & Taft LLP in Brussels. In the past, there have been cases "in which arguably the stop-the-clock mechanism was used to buy time in the procedure when there were no other options."

Regulators already extended the review last month to add an extra 20 working days to the deadline.

Margrethe Vestager, the EU’s antitrust chief, earlier this month pleaded with merging companies to be up-front with officials reviewing deals. The EU process is "based on the trust that everyone plays by the rules. If that gets broken down, things get much more burdensome" and regulators are forced to "check and check again" the information they get from companies, she said.

While she said she wasn’t specifically referring to Halliburton, she has described the deal as "complicated" to examine.

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 U.S. Department of Justice’s concerns.

The EU merger authority opened an in-depth probe into the deal on Jan. 12, citing concerns that combining the second- and third-largest suppliers to oil exploration companies may impede competition and increase prices.

Baker Hughes didn’t immediately respond to requests for comment.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net Peter Chapman, Christopher Elser.


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