Hours after Weatherford International Plc (NYSE:WFT) reported its plans to raise $1 billion in an expected move linked to a probable bid for Halliburton Company (NYSE:HAL) assets, the company pulled a U-turn. The management stated that although investor interest was positive for this offering, the company is reluctant to offer securities at prices that in no way reflects the value they have created at Weatherford. They will follow the initial resolute course of concentrating on core operations and the efficiency of its business.
The buzz
Weatherford International had said earlier in week that it would raise the funds through the sale of convertible notes and stocks. Many analysts expected its Switzerland-based unit, known as Baar, to deploy the new capital to bid for some of the assets of Halliburton. The number two oil-services provider firm is selling to get regulatory approval for its merger deal with Baker Hughes Incorporated (NYSE:BHI).
Weatherford jumped more than 10% on Tuesday and closed at $9.31. It should be noted that WFT stock recorded a sharp decline of 17% on Monday. The second statement on Monday failed to address how the cancellation of offering would affect acquisition plans. It is wise to conclude Weatherford won’t be chasing acquisition deals of sufficient scale demanding significant financing.
Debt reduction
Weatherford International Plc (NYSE:WFT) had revealed its plans to reduce debt and sell non-core businesses so as to boost investor confidence. It will help company to scale up from existing problems that also include amended financial report after accounting errors. Brad Handler of Jefferies stated that the chase of Halliburton’s properties by the company seemed attractive. If Weatherford passes up these acquisition opportunities to get stability, then they think investors are in a better position. Bernard Duroc-Danner, the CEO at Weatherford, told investors and analysts in July that he was content with their limited line of oilfield service operations and was not seeking to expand.
