ValueAct places a $3-billion bet on Baker Hughes merger with Halliburton

ValueAct Capital Management has amassed a new stake in Halliburton Co. alongside its activist holdings in Baker Hughes Inc. as the investor champions an agreed merger of the oilfield-services providers, a person with knowledge of the matter said.

ValueAct acquired about 30 million shares of Halliburton, said the person, who asked not to be identified because the investment isn’t yet public. The stake would be about 3.5% of Halliburton’s shares outstanding, according to data compiled by Bloomberg. The San Francisco-based firm disclosed in a Jan. 16 filing that it owned about 22 million shares in Baker Hughes, a 5.1% stake.

Halliburton agreed to purchase No. 3 Baker Hughes in November in a $34.6 billion deal that will require asset sales to win antitrust approval. By buying into both sides, ValueAct is betting almost $3 billion that cost and tax savings will strengthen the combined company amid turmoil in the energy industry and position it to benefit from a recovery. The fund would be among the biggest owners of the new Halliburton.

Combination’s Impact

The combination of the companies would expand Halliburton’s global portfolio, add technologies and help it better compete with bigger rival Schlumberger, while also jettisoning some competing business units.

The combined company will have as much as $8 billion excess cash that could be returned to shareholders, and also provide a cushion throughout the energy sector downturn, the person said.

Halliburton’s shale technologies mean it’s well positioned to grow long term as energy investment shifts to North American shale assets from deepwater exploration, the person said.

ValueAct, which manages about $17 billion, has served on at least 38 public company boards and typically seeks influence behind the scenes, often with a directorship.

World Oil

Leave a Reply

Your email address will not be published. Required fields are marked *