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Halliburton, BHI Assets Find Carlyle as New Potential Buyer

Major oilfield services players Halliburton Company HAL and Baker Hughes Inc. BHI are in serious discussion with private equity firm The Carlyle Group LP CG to divest properties worth as high as $7 billion, going by The Wall Street Journal.  

Most importantly, talks with Carlyle Group eased the worries of Halliburton and Baker Hughes as both firms have been struggling to reach an accord with General Electric Company for divesting assets. According to people familiar with the matter, both the oilfield services firms have been facing difficulties in agreeing on the price of the properties to be sold to General Electric.

The need to sell assets has been of utmost importance for Halliburton and Baker Hughes as the Department of Justice (DOJ) filed a civil antitrust lawsuit in an attempt to block the $35-billion merger.   

Let us examine the primary reasons that led DOJ to obstruct the deal. Halliburton and Baker Hughes are the second- and third-largest oilfield services players in the world in terms of market capitalization. According to the justice department, if the two leading players merge, there will be plenty of opportunities for the combined company to take unfair advantage of the oilfield services market. The primary threats to the market include the elimination of competition and increasing prices. The merger might also impede innovations in the industry.

Investors should know that if the merger somehow gets completed, there will be only two major players in the oilfield services industry. One will be the combined Halliburton and Baker Hughes and the other will be Schlumberger Limited SLB, the largest oilfield service player.

Houston, TX-based Halliburton and Baker Hughes currently carry a Zacks Rank #3 (Hold), implying that the companies will perform in line with the broader U.S. equity market over the next one to three months.

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BAKER-HUGHES (BHI): Free Stock Analysis Report
 
SCHLUMBERGER LT (SLB): Free Stock Analysis Report
 
HALLIBURTON CO (HAL): Free Stock Analysis Report
 
CARLYLE GROUP (CG): Free Stock Analysis Report
 
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