The UK’s competition regulator says Baker Hughes’ proposed sale of coiled tubing and pumping assets may be enough to clear its concerns over the acquisition of rival Altus Intervention.
Baker Hughes (NASDAQ:BKR) announced its bid to acquire wells specialist Altus in March, in a move which would see it take on the company’s 1,200 global staff, including more than 500 in Portlethen near Aberdeen.
The Competition and Markets Authority (CMA) launched a probe into the deal in August to examine whether the acquisition would negatively impact the UK wells services market.
In findings published in November, the CMA confirmed it had concerns that the deal would leave only one other major supplier – Halliburton – in the market, while Baker Hughes would only face competition from “a small number of other suppliers that are much weaker competition in the UK”, particularly with regards to coiled tubing and pumping.
However, in a 6 December update made public shortly before Christmas, the regulator said divestments proposed by the oilfield services giant may be enough to allow the merger to proceed.
Under its proposals Baker Hughes would offload its UK coiled tubing and pumping business to a CMA-approved buyer.
This would see it shed four coiled tubing units along with related equipment, yard and support equipment, as well as all personnel working for the business, including key management and staff.
Customer contracts, inventories and all supplier contracts would also be transferred.
The company previously noted that the CMA has not questioned the core rationale of the deal.
In its latest response, the CMA said these “might be acceptable as a suitable remedy” to its competition fears, “given that the divestment of BH’s CT and Pumping business assets in the UK would remove the overlap between the Parties in the supply of CT and Pumping in the UK.”
In a statement to Energy Voice Baker Hughes said it was “pleased the CMA issued an ‘acceptable in principle’ decision on 6 December 2022 concluding that the divestiture of Baker Hughes’ UK coiled tubing and pumping business might be an acceptable remedy.
“Based on this development, Baker Hughes will progress the sale of Baker Hughes’ UK coil tubing and pumping business and continue to work constructively with the CMA on next steps.”
While it could still escalate its investigation to a further “Phase 2” process, the CMA said it expected the divestment would likely prove to be a “sufficiently clear-cut and effective resolution” of its concerns.
Further details on the deal will be published “in due course”, the regulator said. It now has until 3 February 2023 to decide whether to accept the proposals.
Headquartered in Norway, Altus operates in 11 countries including the UK. The firm was established in 1980 and went on to set up bases in areas including the US and the Middle East.
Announcing the takeover last March, Baker Hughes executive vice president Maria Borras said the addition “supports our strategy to transform core oil and gas operations by enhancing technological capabilities and providing customers with higher-efficiency solutions.”
“We value the Altus Intervention team’s deep expertise and look forward to bringing these fully integrated well intervention solutions to our global customer base,” she added.