Updated January 13, 2015: The European Commission has initiated a Phase II review of Halliburton’s (NYSE: HAL) pending acquisition of Baker Hughes (NYSE: BHI). Halliburton and Baker Hughes have stated that the companies will continue to work constructively with the Commission.
Neither Baker Hughes nor Halliburton submitted proposed remedies related to the proposed merger of the two oilfield services companies to European regulators for the Phase I review process deadline of January 5, according to analysts with Seaport Global Securities.
What's next with regard to European regulators? Expect the European Commission to subject the proposed merger to a Phase II review, the analysts offered in a client note Thursday morning, possibly pushing the potential closing date into the summer months.
“Continuing delays increase the risk of the merger closing, but we still expect the merger will ultimately receive regulatory approval with additional asset divestitures, and perhaps a more definitive view of the asset buyers,” they continued.
The boards of directors of both Halliburton and Baker Hughes, along with stockholders, have approved the transaction, and regulatory clearances have come from Canada, Colombia, Ecuador, Kazakhstan, South Africa, and Turkey. Discussions with others continue. In December, the US Department of Justice informed the companies that remedies offered were not sufficient to address DOJ concerns, but left the door open for further proposals.