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Halliburton, Baker Hughes Merge in $34.6 Billion Deal
Rishi Iyengar
Nov. 18, 2014
The merger will save the oil-drilling companies a combined $2 billion in costs
Two U.S. oil-drilling giants became one on Monday, when Houston-based companies Halliburton and Baker Hughes agreed to a $34.6 billion merger.
The deal came soon after talks between the two competitors broke down and Halliburton indicated the possibility of a hostile takeover of Baker Hughes, the New York Times reported.
Halliburton, controversial for its role in the 2010 Deepwater Horizon oil rig explosions, will retain its name in the new combined entity, and its chief executive and chairman David J. Lesar will take the helm.
The combination of the two companies’ resources, including operations and research and development, will save over $2 billion in costs and help them compete with industry leader Schlumberger.
http://time.com/3591185/halliburton-bak ... 6-billion/
Halliburton and Baker Hughes deal means layoffs
Combined firm promises to find $2 billion in cost reductions
By Chris TomlinsonNovember 17, 2014 Updated: November 17, 2014 12:28pm
Halliburton Co. and Baker Hughes Inc. announced job cuts today, though the chief executives declined to say how many or where. That's just the way these big mergers work, and it's not as bad as you might think.
The way to make money merging two big companies like this is to combine operations and eliminate redundancies. And some workers will, to use a British idiom, find themselves made redundant. That's the headline for employees in Houston, where both companies have major operations.
If you're a logistician, an office manager or executive assistant at Halliburton or Baker Hughes, then you should be updating your LinkedIn account and resume. Page nine of a presentation released Monday shows that of the $2 billion in cuts the combined company expects to make, 31 percent will be in North American operations, 18 percent will be in administration and 9 percent in corporate.
If you're an engineer, scientist or field worker, you're probably OK for now.
Neither Halliburton CEO Dave Lesar nor Baker Hughes CEO Martin Craighead would talk about layoffs, but did not deny some are coming.
"We don't want to be insensitive to the uncertainty and acknowledge that the fact that anytime you have institutions of this size coming together there will be some adjustments, but I think it would be premature to speculate," Baker Hughes CEO Martin Craighead told the Houston Chronicle in an interview Monday morning.
No one wants to lose their job, but Halliburton's purchase of Baker Hughes is a smart move as oil prices bottom out and show no sign or returning to this summer's highs. Next month dozens of oil companies will likely announce that they are not going to spend as much on capital expenditures in 2015 as originally thought, and that means belt-tightening at oil field services firms like Halliburton and Baker Hughes.
The merger will give executives a chance to build a new company that is structured to handle lower crude prices.
Lesar said Halliburton still plans to hire 21,000 people next year, and I don't doubt that he will. But I promise you those 21,000 people will be engineers, scientists and experts who will improve the new company's products and operations, and the money for those salaries will come from reduced overhead costs, such as duplicate offices, supply chains and administrative staff.
Frankly, those who receive pink slips should probably be thankful the layoffs are taking place now, while the Houston is economy strong and unemployment is low. It's easier to find a new job now than it would be during a recession when every company is reducing staff.
I'll be watching closely to see what other companies do in the months ahead, and studying the capital expenditures of oil companies for next year. There is a chance that the layoffs from this merger be a harbinger of things to come.
http://www.houstonchronicle.com/busines ... 898670.php
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