Acquisition of Baker Hughes Incorporated (BHI) by Halliburton Company (HAL) May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of Baker Hughes Incorporated (NYSE: BHI) by Halliburton Company (NYSE: HAL). On November 17, 2014, the two companies announced the signing of a definitive merger agreement pursuant to which Halliburton will acquire Baker Hughes. Under the terms of the agreement, Baker Hughes shareholders will receive $78.62 for each share of Baker Hughes common stock.
Is the Proposed Acquisition Best for Baker Hughes and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at Baker Hughes is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $78.62 merger consideration represents a premium of only 31.3% based on Baker Hughes’s closing price on November 14, 2014. This premium is significantly below the median one-day premium of 38.43% for comparable transactions within the past five years. Further, the $78.62 merger consideration is significantly below the target prices of three analysts, including a target price of $90.00 set by an analyst at RS Platou Markets on July 3, 2014.
On October 16, 2014, Baker Hughes released its earnings results for its third quarter 2014, reporting record quarterly earnings. Specifically, the company reported record revenue of $6.25 billion for the quarter, up 5% sequentially, and record EBITDA of $1.12 billion, up 3% sequentially. In addition, Baker Hughes has beat consensus analyst estimates for both adjusted EPS and sales in three out of its last four quarters. In commenting on these results, Martin Craighead, Baker Hughes Chairman and Chief Executive Officer remarked, “Our third quarter results included record revenue, record free cash flow, and more than a 10% sequential increase in adjusted earnings…. Our outlook for the near term remains positive based on increasingly favorable market conditions in our North American business and recent actions to increase profitability internationally.”
In light of these facts, Robbins LLP is examining Baker Hughes’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Baker Hughes shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Baker Hughes shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.