Despite Australian scrutiny, Halliburton confident Baker Hughes deal will get done

Halliburton said it remains confident that its $35 billion takeover of rival oil field services firm Baker Hughes will pass regulatory muster, despite fresh scrutiny by Australian antitrust regulators Friday.

In a preliminary view released Friday, the Australian Competition and Consumer Commission said the proposed acquisition raises concerns about competition across a variety of oil field goods and services businesses around the world because the two are such close competitors.

The deal would fuse together two of the world’s three largest global oilfield services providers, which may “create conditions that would facilitate coordinated behaviour in the market,” Chairman Rod Sims said in a statement.

“These businesses have significant competitive advantages in providing services as they benefit from extensive product ranges, economies of scale and scope, large R&D budgets and significant industry experience,” he said.

The commission expressed particular concern about the market for supplies to high-risk projects, such as offshore drilling.

“The ACCC is concerned that the acquisition would result in the merged entity being one of only a small number of suppliers that could service the relevant markets,” Sims said.

The commission said it has delayed its final decision until Dec. 17, two days later than Halliburton had originally projected to close the merger.

Despite the delay, the Houston-based oil field services giant said it continues to target closing the deal by the end of the year, but said it could push it back to next year, if necessary.

“There are certain items outside of Halliburton’s control that could cause the transaction to close in 2016, which is allowed in the merger agreement,” Baker Hughes wrote in a memo to its employees Friday, according to a filing with the U.S. Securities and Exchange Commission. “Halliburton also noted that this in no way changes its confidence that the deal will be approved by applicable competition enforcement authorities.”

Regulators in Canada, Colombia, Kazakhstan, South Africa and Turkey have cleared the deal but the transaction remains under review in the Australia, Europe and the United States. Halliburton said the Australian commission’s announcement Friday was a “normal step” in its process and said it continued to work “constructively with all competition authorities.”