Pending Baker Hughes-GE Partnership Draws Attention
Baker Hughes and GE receive DOJ notice
On March 6, 2017, Baker Hughes (BHI) disclosed that it received an additional information request from the DOJ (U.S. Department of Justice) in connection with its pending combination with GE’s oil and gas business. GE (GE) received the same request from the DOJ. On October 31, 2016, Baker Hughes disclosed that it agreed to form a partnership with GE. To learn more, read GE to Partner with BHI? The Changing Oilfield Services Landscape.
Implications of the notice
The request could extend the waiting period imposed until 30 days after GE and Baker Hughes have complied with the requests. The partnership still needs Baker Hughes shareholders’ approval and other regulatory approvals to go through. Read Can the BHI–GE Partnership Benefit from Global Growth? to learn more about the implications of the proposed deal.
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On March 7, Baker Hughes stock reacted negatively to the news. It fell 1% compared to its closing price on March 6. West Texas Intermediate crude oil prices fell 0.1% on the day. The VanEck Vectors Oil Services ETF (OIH), an ETF tracking index of 25 OFS companies, fell 1.4% on March 7. GE’s stock price was relatively resilient—it only fell 0.5% on the day. Investors might note that Baker Hughes has already been involved in a failed merger proposal with Halliburton (HAL). To learn more, read Baker Hughes–Halliburton Merger Falls Through: Impact on BHI.
Other recent deals in oilfield services industry
In December 2016, Patterson-UTI Energy (PTEN) announced its proposed acquisition of Seventy Seven Energy. To learn more, read Oilfield Services Deal: PTEN Will Acquire Seventy Seven Energy. Read Is FMC Technologies’ Merger with Technip Almost Complete? to learn how the TechnipFMC (FTI) merger was formed.
Next, we’ll discuss analysts’ forecast for Baker Hughes.