Halliburton Company (NYSE:HAL) may be interested in buying Baker Hughes Incorporated (NYSE:BHI). Sources apparently told The Wall Street Journal that talks between the two companies are moving fast and that an agreement could be reached soon. However, the sources added that the talks between Halliburton and Baker Hughes could fall apart before an agreement is reached.
Halliburton, Baker Hughes merger?
The sources did not reveal how much Halliburton might pay to buy Baker Hughes, but it would probably offer a premium to the company’s market capitalization. As of this afternoon, Baker Hughes’ market cap was $21.6 billion, while Halliburton’s market cap was $45.2 billion. Shares of Baker Hughes were reportedly halted temporarily after the report.
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If the two oil field service companies do merge, it would be one of the biggest energy mergers in the last several years. It would also come just as the industry deals with the rapid, sudden decrease in oil prices, bringing two of the biggest operators in the oil field service industry together under one company.
Details on Baker Hughes
Baker Hughes was formed by the merger of Hughes Tools Co. and Baker International in 1987. The company’s website shows that it has more than 60,000 employees. Oil field services companies like Halliburton and Baker Hughes assist energy companies with finding and extracting hydrocarbons.
Recently, there has been an oversupply of natural gas in the last few years, which has resulted in falling oil prices. As a result, energy companies have been shifting their operations over to shale, which is actually more difficult to tap.
TheStreet Ratings Team has a Buy rating and a B-ratings score on Baker Hughes. The analysts say strong revenue growth, plus a “largely solid financial position” and “reasonable debt levels by most measures” and earnings per share growth make the company look good. Baker Hughes has also been improving its net income and has shown a “notable return on equity,” according to The Street.