A $35 billion oil merger is on the verge of falling apart

By Akin Oyedele



Shares of Baker Hughes fell more than 12%, and Halliburton tanked more than 5%, following a Bloomberg report on Wednesday that their planned merger has met a regulatory roadblock.
According to Bloomberg's David McLaughlin, who cites people familiar with the matter, the deal is facing opposition from Justice Department lawyers. The lawyers reportedly say that a merger between the second- and third-largest oilfield services companies would stifle competition.

Last November, Halliburton announced it would buy its smaller rival for $34.6 billion in cash and stock.

Bloomberg noted that the Justice Department's antitrust division has assigned John Read to oversee the review. He's the same lawyer that won the antitrust charge against American Express in February over whether the company could ban merchants from accepting other credit cards.

Halliburton would be billed 10% of the value of the deal if it's broken up, according to Bloomberg.

The two companies reported second-quarter earnings results earlier this week. In its release, Halliburton noted that it took about $67 million in charges related to the acquisition of Baker Hughes during the quarter.

"We are enthusiastic about and fully committed to closing this compelling transaction, and are confident we can achieve cost synergies of nearly $2 billion, regardless of market conditions or any cost reduction actions taken by either company to date," CEO Dave Lesar said in the earnings release.