Weatherford International (NYSE:WFT) has decided to withdraw from a $1 billion deal, just hours after confirming it. Analysts believe that the company was initially aiming to raise the cash due to its interest in Halliburton Company (NYSE:HAL) assets. As per initial reports, the deal required the company to sell stocks and convertible notes, to raise $1 billion. This has left General Electric (NYSE:GE) as the only buyer that can afford to buy the Halliburton Assets.
A statement released by WFT stated that the company was not willing to sell its stock at a price that was lower than the actual value. However, investor interest in the deal was very strong. The stock registered a surge in terms of share value, following the announcement of the deal being cancelled. Furthermore, Weatherford has shifted its focus towards reducing debt, selling non-core assets and trying to boost investor confidence in the stock.
The CEO of WFT, Bernard Duroc-Danner, stated that he was satisfied with the current assets of the company and was not looking towards expansion anytime soon. He also accepted the fact that the company does not have enough finances to fetch a high-priced deal like Halliburton’s. As per analyst reports, the assets can fetch as much as $5 billion for Halliburton.
However, following the quick change, analysts have begun to doubt the credibility of management reports from the company, with many analysts awarding the stock a sell rating. The rating is also backed by the declining financial situation of the company. Net income for the company during 2Q2015 has declined by 237.2%, as compared to the same period for the preceding year. The company is also trailing the industry average in terms of gross profit margins, return on equity and net operating cash flow. Currently, net operating cash flow stands at 33.1% for WFT.
Weatherford International (NYSE:WFT) experienced a trade volume of 277,280 shares during the September 24 session, to close at a share price of $46.87, after reporting a decline of 2.62%.