Baker Hughes Lays Out Cost Cuts, Buybacks After Halliburton Deal Dies -- Update
May 02 2016 - 7:35AM
Dow Jones News
By Austen Hufford
Baker Hughes Inc. laid out a plan to cut costs and buy back
stock and debt, outlining its path forward a day after its planned
merger with Halliburton Co. was scrapped.
Baker Hughes said it would cut $500 million of costs and weigh a
restructuring of its business, while buying back $1.5 billion of
shares and $1 billion of debt. The funds for the buybacks will come
from the $3.5 billion breakup fee Baker Hughes got from Halliburton
as the deal was called off.
On Sunday, Halliburton and Baker Hughes walked away from their
merger, once valued at nearly $35 billion, after regulators on
several continents claimed it would hurt competition in the
oil-field services business.
The companies had been working for more than a year to get the
complex deal completed and had been planning to potentially sell
billions in assets to appease regulators.
Baker Hughes had amassed $306 million in merger-related costs,
after taxes, in 2015 and the first quarter of this year, according
to regulatory filings.
Oil-field services firms, which are hired to drill and frack
wells, were among the first to feel the pain from lower oil prices,
and have been forced to make some of the deepest cuts and to
curtail operations.
But Baker Hughes has been constrained by its merger agreement
from making sweeping changes without Halliburton's approval. The
company said last week that it carried $110 million of costs during
the first quarter that it wasn't able to cut because of the
merger.
Monday, Baker Hughes said it was "taking immediate steps" to
remove those previously uncuttable costs and was also "evaluating
broader structural changes" to further reduce expenses and improve
efficiency.
Baker Hughes also said it intends to refinance its $2.5 billion
credit facility, which expires in September.
Shares of the company fell 0.6% to $48.05 in premarket
trading.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
May 02, 2016 08:20 ET (12:20 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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