US services giant Halliburton is offering five tranches of senior notes for a total of US$7.5 billion, to use the cash to fund a portion of the pending $34.6 billion Baker Hughes mega merger.
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Image from Baker Hughes. |
Halliburton expects the offering to close next week on 13 November 2015.
Although some of the net proceeds will be used for general corporate purposes, Halliburton will use some of the cash for the pending takeover of rival Baker Hughes.
“In the event that the Baker Hughes acquisition is not consummated, Halliburton intends to use the net proceeds from the sale of the 2025 notes, the 2035 notes and the 2045 notes for general corporate purposes. The 2020 notes and the 2022 notes will be subject to a special mandatory redemption if the Baker Hughes acquisition is not consummated. Pending the application of the net proceeds to finance the Baker Hughes acquisition, Halliburton may temporarily invest the net proceeds in cash equivalents or short-term investments.”
The five tranches include: $1.25 billion of five-year notes bearing interest at a fixed rate of 2.70% per year and maturing on 15 November 2020; $1.25 billion of seven-year notes bearing interest at a fixed rate of 3.375% per year and maturing on 15 November 2022; $2 billion of 10-year notes bearing interest at a fixed rate of 3.80% per year and maturing on 15 November 2025; $1 billion of 20-year notes bearing interest at a fixed rate of 4.85% per year and maturing on 15 November 2035; and $2 billion of 30-year notes bearing interest at a fixed rate of 5.00% per year and maturing on 15 November 2045.
Almost one year ago, on 17 November 2014, Halliburton and Baker Hughes announced its stock and cash merger agreement.
In September, both companies revealed intentions to divest several of their businesses for the approval of the merger, in addition to a delay with the Antitrust Division of the US Department of Justice that is now expected to close next month on 16 December, however it is possible it will be extended into 2016.
The pending acquisition has already received unconditional regulatory clearances in Canada, Kazakhstan, South Africa, and Turkey.
In March, stockholders from Halliburton and Baker Hughes showed an overwhelming response in favor of the merger of nearly 99% and 98%, respectively.
The deal is expected to create $2 billion a year in cost synergies, and up to $7.5 billion in divestments for Halliburton. It will give Baker Hughes an enterprise value of approximately $38 billion.
Read more:
Halliburton, Baker Hughes to sell more businesses
Halliburton, Baker Hughes merger gets DOJ extension
Stockholders approve Halliburton/Baker Hughes deal
Halliburton announces Baker integration plan
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