Halliburton May Divide Into Separate Business Units
Halliburton Co. may separate into two independent subsidiaries by midyear, a move that will mean some layoffs, the company's chief executive, David Lesar told workers in an e-mail message.
Lesar said the changes were designed to make it easier for investors to understand the company's business and to stop the slide in Halliburton stock because of asbestos liability. In an e-mail to employees Monday, Lesar said he decided to separate Energy Services Group, the part of the business that helps oil and gas companies, from Kellogg Brown & Root, an engineering and construction unit. Each would be a wholly owned subsidiary of Halliburton. "Although there are no specific plans at present, this will also allow for us at some point in the future, if the opportunity arises, to consider separation of the ownership of the two businesses," Lesar said.
Lesar acknowledged that splitting the company will be difficult but said impact on business operations will be minimal. The company will eliminate an administrative bureaucracy that served both the energy and construction businesses.
"While there will be job losses, the vast majority of our 85,000-strong work force will not be affected," Lesar said, expressing confidence that Halliburton's fortunes will improve with a stronger economy later this year. Lesar said he would remain chairman, president and chief executive over both units. Chief financial officer Doug Foshee and general counsel Les Coleman would also work for both units, but other employees would be assigned to one group. Lesar said that Edgar Ortiz will become chief executive of the energy group and Randy Harl will become CEO of the construction group. In a separate message, Harl said that shifting the engineering and construction business into a wholly owned subsidiary would mean "less dependence on our parent company for financial support." He said the unit would be in better position over the long term as purely a construction company, to be called KBR.