Halliburton Chairman, President and CEO David Lesar rings the New York Stock Exchange opening bell
New York - Arab Today
US antitrust officials has filed suit to block Halliburton's proposed $34.6 billion takeover of rival Baker Hughes that would create a global oil services giant. The Justice Department said the proposed merger, agreed in response to plunging oil prices, would eliminate competition, raise prices and reduce innovation in the oil services business.
The deal, announced in November 2014, would join the world's number two and number three oil services companies, creating a powerful rival to global leader Schlumberger.
The Justice Department said the transaction would eliminate key head-to-head competition in markets for 23 products or services. Proposed remedies offered by the companies to sell assets were insufficient, the department said.
"This transaction is unprecedented in the breadth and scope of competitive overlaps and antitrust issues it presents," said assistant attorney general Bill Baer.
"Halliburton and Baker Hughes are two of the three largest integrated oilfield service companies across the globe, and they compete to invent and sell products and services that are critical to energy exploration and production. We need to maintain meaningful competition in this important sector of our economy."
The two companies said they would "vigorously contest" the case, which they said was based on a misreading of the oil services market. The deal would provide customers with better access to top technology and lower the cost of producing oil, they said in a joint statement.
"The companies intend to demonstrate that the DOJ has underestimated the highly competitive nature of the oilfield services industry, the many benefits of the proposed combination, and the sufficiency of the divestitures," Halliburton and Baker Hughes said.
Baker Hughes shares rose 6.8 percent, while Halliburton climbed 5.0 percent.