Halliburton, BHI Keystoned -- May 1, 2016

Updates

May 2, 2016: Baker Hughes lays out plans to cut costs.

Baker Hughes Inc. laid out a plan to cut costs and buy back stock and debt, outlining its path forward a day after its planned merger with Halliburton Co. was scrapped.

Baker Hughes said it would cut $500 million of costs and weigh a restructuring of its business, while buying back $1.5 billion of shares and $1 billion of debt. The funds for the buybacks will come from the $3.5 billion breakup fee Baker Hughes got from Halliburton as the deal was called off.

On Sunday, Halliburton and Baker Hughes walked away from their merger, once valued at nearly $35 billion, after regulators on several continents claimed it would hurt competition in the oil-field services business. 

I hope those who were adversely affected by Obama regulators remember this in November, though much of the pushback came from the EU.

Original Post

The Wall Street Journal  reports that Halliburton and Baker Hughes have called off their merger.

Halliburton Co. and Baker Hughes Inc. called off their merger, once valued at nearly $35 billion, which encountered opposition on several continents from regulators who claimed that it would hurt competition in the oil-field services business.

The merger would have hardly have been noticed by Joe Six-Pack or Wendy Wine Cooler, but if it had not been an oil and gas merger it would have sailed through.

The New York Times reports that the Charter - Time Warner Cable merger approved by regulators will create an Internet giant.

Charter’s $78 billion bid, on the other hand, has always been seen as more likely to clear regulatory hurdles.

Last year, research firm Leichtman Research Group estimated that Charter would end up with 18 million subscribers if the merger were approved, placing it ahead of AT&T’s 16 million subscribers but behind Comcast’s 22 million. In other words, it would make Charter considerably more powerful in the market, but it would still have large rivals to keep it in check.

Sure. 

By the way, earlier from the Motley Fool regarding the Halliburton - BHI merger:

Tied into the pending agreement is a $3.5 billion breakup fee that would pay Baker Hughes roughly $8 per share. According to Bloomberg, "at about 10% of the deal value, the breakup fee is far larger than the average of 4% paid by U.S. acquirers this year." Additionally, Halliburton issued $7.5 billion in senior notes to help fund the deal, leaving it overleveraged if the deal falls through. 

For Baker Hughes, a $3.5 billion breakup fee would probably be mitigated by the loss of any merger-related premium currently baked into the stock price. Additionally, losses at the company are greater than at Halliburton, causing many analysts to question how long Baker Hughes can operate as an independent company.

In February, Morgan Stanley downgraded shares because the market wasn't "pricing in the necessary risk associated with a potential failed deal." 

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On A More Pleasant Note, Talladega Was Incredible ... For Spectators

Yahoo!Sports is reporting:

Consider: Chris Buescher flipped three times. Danica Patrick upended Matt Kenseth. Kevin Harvick ended the day sliding across the fence on his roof.

All in all, millions of dollars' worth of cars ended up totaled, with the only winners—besides Keselowski, of course—being the scavengers who prowled the garage throughout and after the race, carrying off a fender or a bumper or a chunk of brightly-painted sheet metal.

The drivers were wrestling with more immediate concerns. Both Kenseth and Patrick allowed that they were a little nervous in the long instants before their cars collided with the wall. Kenseth said he prayed, while Patrick just closed her eyes ... until the fire started in the car, that is.

I thought it was a great race. Ticket-holders certainly got their money's worth. And no spectator was injured (as far as I know), nor were there any serious injuries among drivers. 

So, what's the beef?