Research Insights and the Halliburton-Baker Hughes Merger

Conventional business wisdom states that mergers make business sense. Merging firms can cut costs by reducing redundancies and consolidating operations, expanding their scope and market share, and freeing up capital for further growth. Last November, Halliburton and Baker Hughes, the second and third largest oilfield services firms in the world decided to merge. According to Halliburton, the deal, the biggest takeover of a U.S. energy company in three years, will consolidate operations, provide cost savings and align and expand their customer base. Halliburton’s CEO Dave Lesar has said that the merger could save the merged entity as much as $2 billion a year. And with lower oil prices and mounting pressures on margins, such a merger may make even more sense. But despite the many opportunities for business success, mergers are complicated and risky business.