Halliburton to take on $7.5 billion in debt for Baker Hughes deal

Oil field services giant Halliburton announced Thursday plans to take on $7.5 billion in debt to pay for the acquisition of rival firm Baker Hughes as the company chugs forward with its takeover despite speculation the deal may be falling apart.

Halliburton said it will issue the notes in five tranches at an average combined interest rate of 4 percent, with the notes slated to mature between 2020 and 2045.  The offering, which Halliburton expects to close Nov. 13, will be used to pay off some of the cash portion of its bid for Baker Hughes, the company said.

Should the deal fall through, Halliburton plans to use the proceeds from the notes to pay for general corporate purposes, including expenses associated with the termination of the transaction.

Originally valued at nearly $35 billion, the value of the cash-and-equity deal has slipped to $27 billion as of late October, Halliburton said.

The gap between the per-share value of Halliburton’s offer and the share price of Baker Hughes’ stock swelled to 22 percent this week, Bloomberg reported, heaping fresh doubt that the deal will come together.

Some analysts have started to question whether Halliburton can complete the acquisition as the company continues to work with domestic and international regulators to gain approval for the merger. An analyst at Jefferies LLC this week lowered the probability that the deal will pass regulatory muster amid intense scrutiny by the European Union.

In a presentation released Thursday, Halliburton said that it expects to resubmit a filing with the European Union in the coming weeks, an announcement that should help bolster investor confidence that the transaction will cross the finish line, analysts at investment banking firm Tudor, Pickering, Holt & Co. said.

“(This) is just the sort of welcome ammunition needed to blast holes in arguments as to why this … merger won’t happen,” the firm wrote in a note to investors Friday.

Regulatory reviews have already been pushed back in the United States and most recently Australia, where officials raised concerns about competition across a variety of oil field goods and services businesses around the world because the two are such close competitors.

In a recent earnings call, Halliburton’s executives said they still hoped to close the deal by mid-December, but added that the agreement allows the companies to extend the transaction into 2016 if necessary.