Halliburton goes hostile in Baker Hughes takeover bid

Oilfield services and technology provider Baker Hughes has today announced that Halliburton wants to nominate candidates to replace the entire board of directors of Baker Hughes at its Apr. 2015 annual meeting. To remind, it has earlier been announced that the two companies were in talks where Halliburton would buy Baker Hughes.

According to Baker Hughes, during the discussions Halliburton refused to improve first and only value proposal.

Baker Hughes has said it considers Halliburton’s intention (to replace Baker Hughes’ board) as an attempt to pressure the Baker Hughes board into accepting a transaction with Halliburton on Halliburton’s terms.

The discussions began after Baker Hughes received an unsolicited proposal from Halliburton without prior notice on Oct. 13, 2014 to acquire all of the outstanding shares of Baker Hughes in a proposed transaction that Halliburton claimed would produce $2 billion in synergies after any required divestitures.

Baker Hughes has informed that the talks went on over the following weeks and significant progress was made in analyzing the substantial antitrust issues that would be involved in any such transaction, allocating antitrust risk between Halliburton and Baker Hughes, and negotiating merger documentation.

“Baker Hughes is disappointed that Halliburton has chosen to seek to replace the entire Baker Hughes board rather than continue the private discussions”

Baker Hughes disappointed

However, Baker Hughes adds in its statement, after receiving the Company’s counter proposal on value, Halliburton refused to increase its first and only value proposal and, among other things, refused not to solicit the Company’s employees during the period before closing. Instead, Halliburton delivered the director nomination notice to Baker Hughes.

Martin Craighead, Chairman and CEO of Baker Hughes stated: “Baker Hughes is disappointed that Halliburton has chosen to seek to replace the entire Baker Hughes board rather than continue the private discussions between the parties. Baker Hughes believes that Halliburton’s various attempts at coercive tactics, instead of being willing to negotiate a reasonable value for the Company’s stock and despite having stated twice that they have room to increase the value of their offer, are attempts to control both sides of a negotiation and are entirely inappropriate.”

Baker Hughes said that its board, in consultation with its financial and legal advisors, has “carefully reviewed and considered Halliburton’s initial proposal and unanimously determined that it is not at an adequate value level and therefore not in the best interests of the Company’s stockholders.”

Accordingly, the company advised its stockholders not take any action at this time.

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