HOUSTON (AP) — Oilfield-services company Baker Hughes Inc. said Friday that rival Halliburton Co. plans to nominate candidates to replace the entire board of directors of Baker Hughes after negotiations about a possible acquisition stalled.
Baker Hughes said that Halliburton has refused to raise its first and only offer to buy it, which the Baker Hughes board determined was not "adequate." Baker Hughes didn't disclose the offer's value.
Baker Hughes said it considers Halliburton's move to replace its directors an attempt to pressure its board into accepting the offer. A combination of the two would create a company slightly larger in revenue than Schlumberger Ltd., currently the world's biggest oil services company.
The deal talks began after Baker Hughes received an unsolicited offer from Halliburton without earlier notice last month.
"Baker Hughes is disappointed that Halliburton has chosen to seek to replace the entire Baker Hughes board rather than continue the private discussions between the parties," Baker Hughes CEO Martin Craighead said in a statement.
Halliburton, Baker Hughes and Schlumberger help energy companies find and extract oil and gas.
Baker Hughes said Halliburton would try to replace its board at the company's annual meeting in April. In the meantime, Halliburton could take its offer directly to Baker Hughes shareholders.
The deal talks between the two Houston-based companies come during a drop in oil prices that has hurt both companies' stock prices. Global oil prices have fallen 31 percent over the past 5 months to levels not seen in four years.
That will put pressure on service companies to reduce their costs. Stern Agee analysts say a deal could help Halliburton trim costs by $600 million to $750 million.
But the oil plunge has also made Baker Hughes cheaper for Halliburton to buy. Shares of Baker Hughes fell 32 percent, reducing the company's market capitalization by $10.4 billion between late June and Thursday, when news of a potential deal sent the shares higher.
Halliburton and Baker Hughes have both benefited from the boom in drilling in the U.S., which they helped fuel by developing technology to draw oil and gas from shale and other tricky geologic formations.
But even when oil prices were high, oil companies were beginning to slow capital spending and new drilling because costs were rising and profits margins were shrinking.
Now, with oil below $80 a barrel, oil companies will have even less to spend on new drilling.