Halliburton and Baker Hughes are in talks to sell $7 billion in assets to private equity shop Carlyle Group LP, according to a report in the Wall Street Journal.
The two Houston companies have sought to overcome antitrust concerns over their potential $35 billion merger by shopping overlapping assets to competitors such as General Electric Co. and, briefly, Weatherford International. The report indicates a widening of the market for the businesses owned by Halliburton and Baker Hughes, which have faced strong opposition from antitrust regulators over their plan to combine.
The Journal, citing sources familiar with the matter, said Halliburton and General Electric couldn’t agree on a price, though it remains in the running to buy the businesses. Regulators were in part concerned that the businesses Halliburton shed wouldn’t survive on their own or as part of a smaller competitor. In addition, low oil prices have strained the oil services industry, limiting the pool of buyers willing to shell out for new ventures.
A sale to a private equity group such as Carlyle Group could address some of these concerns, the Journal reported, though it’s not clear the talks could result in a sale or regulators would bless the divestment.
As part of the merger agreement signed in November 2014, Halliburton agreed to sell assets that generated as much as $7.5 billion in 2013 revenue, but that failed satisfy the Justice Department. Bill Baer, assistant attorney general for the antitrust division, called the deal “unfixable” in announcing the recent lawsuit. “I’ve seen a lot of problematic mergers in my time, but I’ve never seen one that poses so many antitrust problems in so many markets,” he said.
Both Halliburton and Baker Hughes have said they intend to fight to complete the merger. Halliburton has said in the past it was in talks with multiple buyers for its assets.