Baker Hughes Surges After Confirmation Of Acquisition Talks With Halliburton

(RTTNews) - Oilfield services provider Baker Hughes, Inc. (BHI) confirmed late Thursday that it is in preliminary discussions regarding a potential acquisition by larger peer Halliburton Co. (HAL). However, the company noted that the discussions may or may not lead to any transaction.

Following the news, Baker Hughes shares added around 18 percent, including after-hours trading.

Baker Hughes said it does not intend to comment further on market speculation or disclose any developments unless and until it otherwise deems further disclosure is appropriate or required.

The talks between the two Huston-based companies were first reported by the Wall Street Journal earlier in the day.

The move comes as oil-field service companies are grappling with falling crude oil prices, which could threaten their services as clients could cut back on operations due to less profitable oil-and-gas production.

The report stated that the talks are moving rapidly and a deal could be reached soon. However, the proposed deal could also hit regulatory road blocks as the combined entity would dominate several products in the global oil-field services market.

The two companies will also together have presence in more than 80 countries. To get regulatory approval, Halliburton would reportedly have to sell a number of assets across a range of business lines.

Currently, Halliburton has a market value of $45.58 billion, while Baker Hughes has a market capitalization of $25.42 billion following the surge related to the news. A deal to acquire Baker Hughes is expected to be at a premium.

However, the combined entity will still be much smaller than the world's largest oilfield services company Schlumberger Ltd. (SLB), which has a market cap of $122 billion.

BHI closed Thursday's regular trading session at $58.75, up $7.77 or 15.24% on a volume of 19.32 million shares. The stock added a further $1.63 or 2.77% in after-hours trading.