1. Text: | Print|

      Slumping crude oil prices justify consolidation push

      2014-11-19 13:50 Global Times Web Editor: Qin Dexing
      1

      Hostilities may have derailed Halliburton acquisition

      Word surfaced Monday that Halliburton, one of the world's largest providers of oil field services, will pay $34.6 billion to acquire peer Baker Hughes. The deal was struck after the two parties reportedly failed to reach an agreement on the price of the takeover and other key issues and Halliburton threatened to replace the latter's entire board. Instead of a hostile approach, a friendly agreement could help the merger win approval from antitrust regulators in the US and elsewhere.

      Halliburton has plenty of good reasons to pursue such an acquisition now. The move comes on the heels of a major downturn in global crude prices, which investors fear could cut into business for oil field service firms. Against such a backdrop, a merger could relieve some of the pains from slumping oil prices for both Halliburton and Baker Hughes.

      Yet, a drop in oil prices alone, which could prove to be only temporary, is not enough to justify the $34.6 billion acquisition decision. From a long-run perspective, the merger is likely to help Halliburton enhance its ability to compete in the global market while also bringing it synergistic benefits.

      News of merger talks between Halliburton and Baker Hughes, first reported Thursday by the Wall Street Journal, spread fast, sending the latter's stock price up by some 15 percent on the day. However, Baker Hughes had reportedly pulled out of the talks the following day, citing Halliburton's refusal to increase its offer as well as its refusal to guarantee that it would not solicit its rival's employees before the closing of the deal.

      For its part, Halliburton put forward plans to take over Baker Hughes' board of directors, nominating candidates to the board for the latter's annual director election next year.

      The situation changed again Monday, with reports that the two have reached an agreement on the takeover bid. As a result, Halliburton withdrew all of its board nominations as the threat of a hostile confrontation subsided.

      Given potential antitrust concerns and other complexities, a friendly approach could go a long way toward winning regulatory approval. If the merger does happen, it would become one of the largest acquisitions in the oil services sector in recent history.

      With a combined market valuation of about $70 billion, the merged giant would be the biggest oil field services provider in North America. Inevitably, such a big deal would draw close antitrust scrutiny from US and international regulators, and the two companies would have to sell billions of dollars in overlapping assets in order to win over regulators.

      Needless to say, without a cooperative partner company, it would be extremely challenging to dissipate antitrust concerns and satisfy authorities.

      But despite the above-mentioned barriers, the consolidation still makes a great deal of sense given the continued slide in global crude prices.

      With competition growing increasingly fierce in the oil field services industry amid rising oil and gas drilling costs, investors are concerned that falling oil prices may force gas and oil producers to trim spending on new exploration projects.

      As the market becomes more challenging, the takeover of a smaller rival could help a company expand its market portfolio and stay afloat amid the downturn.

      Yet, it should be pointed out that the outlook for oil prices remains uncertain.

      In turn, the future of the oil field services industry appears similarly unsettled. In this connection, the softening oil market may be just the catalyst for industry consolidation. A takeover decision worth around $35 billion should be based on logical motives. From a long-term perspective, a merger between Halliburton and Bakers Hughes would produce a bigger giant with stronger market clout and more robust technological capabilities.

      Once healthy synergies are realized, the business would see deeper cost cuts, higher revenues and a strengthened market portfolio. All these benefits are crucial these days for any industry player. In this sense, the trend of industry consolidation may just be starting.

      Comments (0)
      Most popular in 24h
        Archived Content
      Media partners:

      Copyright ©1999-2018 Chinanews.com. All rights reserved.
      Reproduction in whole or in part without permission is prohibited.

      主站蜘蛛池模板: 蜜芽亚洲av无码精品色午夜| 亚洲色WWW成人永久网址| 亚洲福利一区二区| 久久国产乱子伦精品免费一 | 嫩草在线视频www免费看| 亚洲第一成人影院| 人成午夜免费大片在线观看| 亚洲国产a级视频| fc2成年免费共享视频18| 国产亚洲情侣一区二区无码AV| 国产精品免费观看视频| 亚洲区小说区图片区QVOD| 可以免费观看的国产视频| 日韩精品亚洲人成在线观看| 91福利免费视频| 亚洲 欧洲 日韩 综合在线| 免费高清资源黄网站在线观看| 国产精品观看在线亚洲人成网| 日韩精品电影一区亚洲| 国产高潮久久免费观看| 亚洲成AV人片在线观看| 麻豆高清免费国产一区| 亚洲一区二区免费视频| 精品剧情v国产在免费线观看| 免费夜色污私人影院网站| 亚洲日韩av无码| 最近中文字幕完整版免费高清| 亚洲va久久久久| 亚洲人成无码网WWW| 毛片无码免费无码播放| 亚洲熟妇无码av另类vr影视| 亚洲Av无码乱码在线观看性色 | 亚洲天堂免费在线| 全部免费a级毛片| 黄色片免费在线观看| 亚洲国产成人资源在线软件| 日本大片在线看黄a∨免费| 国产美女视频免费观看的网站| 久久综合亚洲色一区二区三区| 国产午夜影视大全免费观看| 日韩电影免费在线观看网站|