Halliburton 2015 Annual Report Download - page 23

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Item 1(a). Risk Factors.
The statements in this section describe the known material risks to our business and should be considered carefully.
We may be unable to obtain the necessary consents and approvals from governmental authorities required to
complete the Baker Hughes acquisition in a timely manner, or at all. Even if such consents and approvals are obtained,
governmental authorities may impose conditions that could adversely affect us or cause the acquisition to be abandoned.
To complete the acquisition, we and Baker Hughes must satisfy various closing conditions, including obtaining certain
consents and approvals from various governmental and regulatory authorities.
We have not yet obtained all of the regulatory consents and approvals required to complete the acquisition.
Governmental or regulatory agencies could seek to block or challenge the acquisition. Even if these regulatory consents and
approvals are obtained, they may not be obtained prior to April 30, 2016, the current deadline under the merger agreement to
obtain required regulatory approvals before either party is permitted to terminate the merger agreement. The governmental
authorities from which these approvals are required are expected to require significant divestitures, and may impose other
conditions on the completion of the acquisition that could have an adverse effect on the combined company following the
acquisition. We will be unable to complete the acquisition until consents and approvals are received from the European
Commission (EC) and various other governmental authorities (jointly, the “Regulatory Clearances”). Notwithstanding that the
statutory waiting period under U.S. law ended when our timing agreement with the U.S. Department of Justice (DOJ) expired
on December 15, 2015, and even after completion of the acquisition, the DOJ and other governmental authorities could seek to
block or challenge the acquisition as they deem necessary or desirable in the public interest. In addition, in some jurisdictions, a
competitor, customer or other third party could initiate a private action under the antitrust laws challenging or seeking to enjoin
the acquisition, before or after it is completed. Halliburton may not prevail and may incur significant costs in defending or
settling any action under the antitrust laws. The merger agreement may require us to accept conditions from these regulators
that could adversely impact the combined company. If we agree to undertake divestitures or comply with operating restrictions
in order to obtain any approvals required to complete the acquisition, we may be less able to realize anticipated benefits of the
acquisition, and the business and results of operations of the combined company after the acquisition may be adversely
affected.
In December 2015, the DOJ informed us that they did not believe that our previously announced proposed divestitures
were sufficient to address its concerns, and in January 2016, the EC issued a report detailing initial concerns about the
competition-related implications of the acquisition. Although we have recently presented to the DOJ and informally notified the
EC and other jurisdictions of an enhanced set of proposed divestitures, there can be no assurance that the proposed divestiture
package will be sufficient to satisfy their concerns, and there is no agreement to date with the DOJ or the EC as to the adequacy
of the proposed divestitures. Even if the proposed divestiture package is satisfactory to those and other authorities, there can be
no assurance that we will be able to reach an agreement with one or more buyers of those product lines. If the Regulatory
Clearances are not received, or they are not received on terms that satisfy the conditions set forth in the merger agreement, then
neither we nor Baker Hughes will be obligated to complete the acquisition.
If we are unable to complete the acquisition, we would be subject to a number of risks, including the following:
- we would not realize the anticipated benefits of the acquisition, including, among other things, increased operating
efficiencies;
- the attention of our management will have been diverted to the acquisition rather than to our own operations and the
pursuit of other opportunities that could have been beneficial to us;
- the potential loss of key personnel during the pendency of the acquisition as employees may have experienced
uncertainty about their future roles with the combined company;
- we will have been subject to certain restrictions on the conduct of our business, which may have prevented us from
making certain acquisitions or dispositions or pursuing certain business opportunities while the acquisition is
pending; and
- the trading price of our common stock may decline to the extent that the current market prices reflect a market
assumption that the acquisition will be completed.
If the acquisition is not completed, our ongoing businesses may be adversely affected. If we are unable to close the
acquisition by April 30, 2016, either Baker Hughes or we may terminate the merger agreement. Under the merger agreement,
we could be required, in certain circumstances where the termination of the merger agreement is related to failures to obtain the
Regulatory Clearances, to pay Baker Hughes a termination fee of $3.5 billion. If we do not complete the acquisition, we will
also recognize additional non-cash expenses as discussed further in Note 2 to the consolidated financial statements. Payment of
the termination fee and incurring such expenses could have material and adverse consequences to the financial condition and
operations of Halliburton.
We can provide no assurance that the various closing conditions will be satisfied and that the necessary Regulatory
Clearances and other approvals will be obtained, or that any required conditions will not materially adversely affect the
combined company following the acquisition. In addition, we can provide no assurance that these conditions will not result in