The collapse in oil prices is on the verge of killing the proposed merger between two of the world’s biggest oilfield services companies.
Halliburton Inc. (HAL) and Baker Hughes Inc (BHI) have pushed back the deadline for completing their $35 billion merger by another four months to April 30, after the Department of Justice’ antitrust experts raised more concerns about the deal’s impact on competition in the sector.
“The DoJ has informed the companies that it does not believe that the remedies offered to date are sufficient to address the DoJ’s concerns, but acknowledged that they would assess further proposals and look forward to continued cooperation from the parties in their continuing investigation,” the two companies said in a joint statement.
The two giants had offered to sell a package of assets with over $7.5 billion a year in revenues to ensure that there would be enough competition in the sector after they combine. However, the collapse in oil prices has forced drilling companies to slash their investment budgets, meaning that there are few rival companies out there with the money to spend on expanding. According to Baker Hughes, the number of drilling rigs in the U.S. Hit a five-year low last week. Both it and Halliburton have already laid off over 20% of their workforce in efforts to cut excess capacity.
It isn’t only the DoJ that’s concerned about the potential dominance of the Halliburton-Baker Hughes partnership. The European Commission, which polices antitrust issues in the E.U., also requested the merger filing to be resubmitted, while authorities in Australia and Brazil, too, still haven’t given their approval.