Halliburton Is In Talks To Acquire Baker Hughes; Deutsche Bank Comments


In a research report released Friday, Deutsche Bank analyst Mike Urban maintained a Buy rating on Halliburton Company (NYSE:HAL) with a price target of $69/share, following the news that HAL is in talks to acquire Baker Hughes (NYSE:BHI).

Urban commented: “If completed, it would combine the #2 and #3 players and create a company with over $55B in revenue, more than $70B in equity market cap and $80B in enterprise value based on today’s close. Upon completion, it would shift the market dynamic back in favor of the service industry, which has been facing a decline in market power in recent years as operators grew larger in relative terms and more recently in the face of declining oil prices. It would also significantly narrow the gap between BHI/ HAL and long-time market leader SLB.”

The analyst added, “Although the combined company would still be smaller than SLB, it would hold dominant market positions in several sub-sectors and would combine top 3 global players in markets representing roughly 75% of BHI’s revenue. This concentration would is likely to draw significant anti-trust scrutiny not only in the US but in several international jurisdictions where there are fewer viable competitors. The challenges of integrating such a large deal and two strong cultures should also not be under-estimated.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mike Urban has a total average return of -0.5% and a 52.0% success rate. Urban has a -7.4% average return when recommending HAL, and is ranked #2560 out of 3372 analysts.

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