Halliburton 2015 Annual Report Download - page 24

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the abandonment or delay of the acquisition. The occurrence of any of these events individually or in combination could have a
material adverse effect on our results of operations and the trading price of our common stock.
Pending litigation against us and Baker Hughes could result in an injunction preventing the consummation of the
acquisition or may adversely affect our business, financial condition or results of operations following the acquisition.
Following the announcement of the acquisition, various lawsuits were filed in the Court of Chancery of the State of
Delaware and the U.S. District Court for the Southern District of Texas against Baker Hughes, the members of the Baker
Hughes Board, and us, alleging breaches of various fiduciary duties by the members of the Baker Hughes Board during the
acquisition negotiations and by entering into the merger agreement and approving the acquisition and alleging that we and
Baker Hughes aided and abetted such alleged breaches of fiduciary duties. Among other remedies, the plaintiffs sought to
enjoin the acquisition and rescind the merger agreement, in addition to certain unspecified damages and reimbursement of
costs. While we and Baker Hughes believe these suits are without merit and have entered into a memorandum of understanding
with the plaintiffs of such lawsuits to settle such claims, the outcome of any such litigation is inherently uncertain and is
contingent upon the acquisition closing and court approval. If the settlement is not approved or the lawsuits otherwise remain
unresolved after the closing of the acquisition, it may adversely affect the combined company’s business, financial condition or
results of operation.
Our stockholders will have a reduced ownership and voting interest after the Baker Hughes acquisition and will
exercise less influence over management of the combined company.
Our stockholders currently have the right to vote for our board of directors and on other matters affecting the company.
When the acquisition occurs, each Baker Hughes stockholder that receives shares of our common stock will become a
stockholder of ours and correspondingly, each of our stockholders will remain a stockholder of Halliburton Company with a
percentage ownership of the combined company that is significantly smaller than the stockholder’s percentage ownership prior
to the acquisition. Upon completion of the acquisition, former Baker Hughes stockholders are expected to hold approximately
37% of our common stock. As a result of these reduced ownership percentages, our stockholders will have less influence on the
management and policies of the combined company than they now have with respect to Halliburton Company.
We have incurred, and will continue to incur, significant transaction, acquisition-related and restructuring costs in
connection with the Baker Hughes acquisition and the combined company could incur substantial expenses related to the
integration of Baker Hughes.
We have incurred, and will continue to incur, significant costs associated with the expected combination of our
operations and the operations of Baker Hughes, as well as transaction fees and other costs related to the acquisition. Many of
these costs will be borne by us even if the acquisition is not completed. We have also incurred, will incur through completion of
the acquisition, and the combined company will incur following the completion of the acquisition, substantial expenses in
connection with integrating each company’s respective businesses, policies, procedures, operations, technologies and systems.
There are a large number of systems that must be integrated, including information management, purchasing, accounting and
finance, sales, billing, payroll and benefits, fixed asset and lease administration systems and regulatory compliance. Many of
the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. These expenses could,
particularly in the near term, reduce the savings that we expect to achieve from the elimination of duplicative expenses and the
realization of economies of scale and cost savings related to the integration of the businesses following the completion of the
acquisition, and accordingly, any net benefits may not be achieved in the near term or at all. These integration expenses may
result in significant charges taken against earnings by us prior to completion of the acquisition and by the combined company
following the completion of the acquisition. During the year ended December 31, 2015, we incurred an aggregate of $411
million in costs related to the pending Baker Hughes acquisition, of which $308 million are acquisition and integration costs
included within our consolidated statements of operations and $103 million are capitalized divestiture costs included within
"Other current assets" on our consolidated balance sheets.
The market value of our common stock could decline if large amounts of our common stock are sold following the
Baker Hughes acquisition.
Following the acquisition, our stockholders and former stockholders of Baker Hughes will own interests in a combined
company operating an expanded business with more assets and a different mix of liabilities. Our current stockholders and the
current stockholders of Baker Hughes may not wish to continue to invest in the combined company, or may wish to reduce their
investment in the combined company, in order to comply with institutional investing guidelines, to increase diversification or to
track any rebalancing of stock indices in which our or Baker Hughes common stock is or was included. If, following the
acquisition, large amounts of our common stock are sold, the price of our common stock could decline.