What do you think about the merger right now? Is it possible that it never completes because of the drop in our stock price?
7 replies (most recent on top)
Screw the employees, the merger deal is good for the shareholders. When the merger happens, it will unlock the share values for all shareholders and execs' compensation package.
Halliburton always trades at a lower multiple to earnings than Schlumberger. By merging with Baker Hughes, execs assume it can close the valuation gap between itself and Schlumberger. Halliburton shareholders probably vote "yes." However Employees cannot vote; if they do they will vote "no."
As for Baker Hughes, there was a big resistance to merge with Halliburton. By by threatening to slash the board by Halliburton with a hostile takeover, execs complied. It will also unlock value for shareholders as Baker Hughes also trades at a lower multiple to earnings than Schlumberger. To make sure the shareholders vote "yes," activist hedge fund ValueAct Capital spent a huge amount of money to buy 5.1 percent stake in Baker Hughes so it can steer execs in the right way for the merger to happen. If needed to, they can force to get one of their guy to be Baker Hughes board member. Employees cannot say "no" to the merger so the company core value of Courage to say "no" is useless in this case.
By the way, Baker Hughes treat employees nicer than Schlumberger and Halliburton. That's why they haven't announced big layoffs like Schlumberger and Halliburton. Hiring will be frozen and layoff will happen in smaller number. Baker Hughes just made a record profit and revenue. The cash flow is good so they can withstand for months. After all, it will be Halliburton's problem after the merger anyway so why screw a lot of employees with layoff right now.
Now when the merger starts at the second half of 2015, that is a different story. God bless!
I meant either the HAL or BHI shareholders can reject this merger. So far the boards have agreed that they will each recommend the merger to the shareholders, but they still have to put it to the vote.
I think it's unlikely that the merger now will not happen, but lots of things are happening at the moment in the industry so you never know for example the state of affairs in April when the BHI shareholders vote on the merger
What do you mean by "It only takes one set of sharelholders not to go for it." - is not it a majority vote rules?
It only takes one set of sharelholders not to go for it.
There's not coming back at this point
There's too much lawyer money involved with over $3 billions compensation from Halliburton to Baker Hughes if the deal won't go through. The best M&A lawyers will work with them to make sure the deal goes through by spin off required assets to make the governments happy.
It's more of an acquisition than a merger, but if you want to call it a merger go ahead. Halliburton execs will take over and run the show.