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Tuesday, November 18, 2014
Halliburton and Baker Hughes Inc have come to terms over a definitive agreement under which Halliburton will acquire all the outstanding shares of Baker Hughes in a stock and cash transaction. Word of a potential deal between the two made the rounds earlier this month, however the two began talks over a month ago.
On November 14 it seemed as if no deal would be in the offing as reports filtered in that talks between the two had faltered when terms could not be reached on a number of items, including naming the board, price, and how to address anti-trust concerns.
Under the terms of the deal between two of the oilfield and drilling service sectors three top firms, Baker Hughes is valued at $78.62 per share, representing an equity value of $34.6 billion. Upon the completion of the transaction, Baker Hughes stockholders will own approximately 36% of the combined company.
The agreement has been unanimously approved by both companies’ boards of directors.
Stockholders of Baker Hughes will receive, for each Baker Hughes share, a fixed exchange ratio of 1.12 Halliburton shares plus $19.00 in cash. The value of the merger consideration as of November 12 represents 8.1 times current consensus 2014 EBITDA estimates and 7.2 times current consensus 2015 EBITDA estimates. The transaction value represents a premium of 40.8% to the stock price of Baker Hughes on October 10, the day prior to Halliburton’s initial offer to Baker Hughes.
Halliburton intends to finance the cash portion of the acquisition through a combination of cash on hand and fully committed debt financing.
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