International Coal Group Acquisition
Like Alpha Natural Resources, Arch Coal couldn’t resist the urge for inorganic growth when coal prices rose.
Alpha Natural Resources sold 84.8 million tons of coal in 2010 at an average price of $41.2, generating revenues of $3.9 billion.
Until 2010, the Walter Energy’s operations were concentrated in the US. The company sold 8.6 million tons of met coal in 2010 for $163 per ton on average.
Major coal industry players are still paying the price of untimely consolidation in 2010–2011, when floods in Australia left a supply-side gap.
Apart from the premium remaining on the table at the moment, BHI shareholders may end up with a slightly better company than they hold right now.
Halliburton’s offer to combine with Baker Hughes has to receive approval from each of the company’s stockholders and regulatory bodies.
On October 13, Halliburton proposed to acquire Baker Hughes’ shares without prior notice. After receiving BHI’s counter proposal, Halliburton refused to increase its first value proposal.
Halliburton estimates the combined company will increase shareholders’ value through dividends and share repurchases.
As of September 30, Halliburton’s gross profit margin was 17.3% versus 18.3% for Baker Hughes.
In 3Q14, Baker Hughes had more balanced operating profit growth in its geographies versus Halliburton.
The 22% growth in US operations in HAL are primarily due to higher rig counts in the US in the past year.
Overall, from November 12 to November 16, shareholders saw a 28% growth in Baker Hughes stock.
If the transaction goes through, the combined entity of Baker Hughes and Halliburton will become one of the largest oilfield service companies in the US.
On November 17, Halliburton Company, one of the largest US oilfield service companies, disclosed that it will acquire Baker Hughes, its major competitor.
Hostile deals are usually highly rewarding. Despite all the testiness you might see between the two companies, remember that most hostile deals end up becoming friendly deals.
Once the SEC approves the proxy, a vote is scheduled. Usually, the last condition for a deal is the vote of the target shareholders.