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Visit Marx Penneth dot com. Let's go over to the First Word Breaking news desk for today's afternoon call with Bloomberg's Bill Maloney. Bill, Good afternoon, Katherine MANUS averages are trading around their best levels. That is currently hired by a hundred and sixteen points. Sysi He's game fifteen and NAZAC rises thirty nine, the small cap six hundred games three points, and the US ten yeeld jumps to one
point eight six per cent. Nine out of tennis B sectors are higher, led by gains in consumer discretionary, consumer staples and the financials small losses in energy down, Transports rise fifty nine as a biotechs game ten and the vix is down five point seven percent down. Leaders included Microsoft, Home Depot and Goldman. Sachs, Boeing, IBM, and Fiser led to the downside when resorts gained as much as seven percent.
Food service company Cisco gained five percent after its results, while Seagate fell another six percent following Friday's nineteen percent decline. Live from the first Breaking News Descomb, Bill Maloney, Katherine, thank you Bill, and to hear live breaking news over your Bloomberg type s q U a K on your terminal. Herd Oyl is falling for a second day as the rocks exports approached a record high in April. And that's
adding barrels to a worldwide supply. Clock West types is intermedia crude oil down a dollar thirteen of barrel two and a half percent, trading at forty four seventy nine, by gold up two dollars ten cents the ounce at twelve sixty and then ten year treasury down eight thirty seconds with the old of one point eight six percent. And that's a Bloomberg business flash. This is taking stock
with Kathleen Hayes and Grim Box on Bloomberg Radio. Haliburton Baker Hughes calling off their twenty eight billion dollar merger. Let's find out why. Stuart Glickman, director and equity research analysts for SMP Capital i Q joins us now Stewart, thank you very much for being with us. So what really turned this off the rails? Was it the regulatory environment or is it more likely I shouldn't pre judge it. Is it the price of oil? So it's it's a
couple of reasons. I think from the get go, this merger was going to come under intense scrutiny from the Department of Justice because we were talking about prospective merger involving the number two and number three players in oil services. So that's that's gonna rate, that's going to get um some eyebrows raised just on its space. And I think I think what kind of made it even harder to
get through was the deteriorating situation involving industry economics. It's you know, at the time that the deal was announced, this was in the call it November four. Yeah, it was seventy bucks. Seventy bucks for barrel, No even more than that, I believe. Yeah, it was above it was seventy higher exactly it was. It was in the mid seventies when this deal was announced, and I think it was intended to be kind of a defensive move against
you know, weakness and crude prices. But I don't think anybody anticipated that crude was going to drop, um, you know, down to the thirty dollar range, even though it's recovered slably since then, and we're looking at around forty five dollars a barrel. Now, UM, there's just an awful lot of excess capacity when prices fall that far. But having said that, wouldn't it make sense to buy these assets when there's turbulence and the asset values have declined, rather
than waiting for a rebound in oil prices. UM, So you know that that it's an interesting theory. I think the problem for a lot of players is that, even though you know, price stock prices have come down and so assets can be had for cheaper than the otherwise would be UM on a forward value ouation basis, a lot of stocks still don't look cheap. UM you have you have the entire industry really trading above historical multiples.
That's true for Haliber, and it's true for Baker Hughes Um, and it's even true for some of the industry behame this like Lake lamberget Now, Baker Hughes is what going to get a three and a half billion dollar breakup fee? That's right, So they're gonna get exactly they're gonna get three and a half billion dollars and they've they've already outlined some of what they plan to do. Uh, they're going to buy back their own shares to the tune of about one point five billion, which I calculate that
makes up maybe seven percent of their shared outstanding. Uh, they're gonna reduce their debt by about a billion UM. They already have a relatively low net at the capital ratio, so I think it kind of bolsters their balance sheet a little bit in the near term while they fight through this this this fundamental weakness, like everyone is um. But then they also have to do other things beyond that.
They have to undertake another round of cost cuts because all this merger was pending, both Baker Hughes and Haliburt and really sidestep a lot of cost cuts because you're just not sure exactly where you're gonna cut and how until it gets completed. And I think with this off the table, you're gonna you're gonna see a lot more of that. Stock of Baker Hughes is down two and a half percent today. Is Baker Hughes is stock you want to buy? UM? I have a whole opinion on
the stock. I think, you know, as as a defensive play, UM, it has some things going for it, like the fact that it's net debt to capital ratio is relatively low, so near term they can probably UM tread water along with you know, others in the industry. I think the challenges that they have that that UM make it less compelling and not a buy opinion in my In my view is, uh, you know, they have they have organizational challenges.
They have to decide which products and services they would like to be focused on and which ones they don't. They right now, they sort of are trying to be all things to all people UM for the most part, and I think they're planning on being a little more streamlined and a little more focused than they are at the moment. How about Haliburton shares a Haliburton though they're higher today, what is going on there because the deal
is off there? Up two and a half. Yeah, the market didn't like the deal for the most part since it since it began. I think they're trading up as a UM buyers looking like thinking that they kind of sidestep the landline. UM. But I'm I'm not I'm not buying this rally. I'm not in favor of Haliburton at the moment. I have a cell opinion on how I think that the challenges that present in North America are
going to continue through and UM, that's fair. That's their cornerstone, that's that's really the heart of their franchises North America. The one name within oil services that I still like is Schlamberge, and that's because they're more internationally focused. Tell us about Slumberge because they seem to have gone the
cost cutting route a lot faster than many of their competitors. Yeah, I mean Haliburton and slumber have both done cost cuts to some degree, but I think Slumberja was a little bit more UM extensive with that, Um, they haven't had the distraction of the pending merger to deal with. They are much more internationally focused, and so the upstream, the upstream players that are cutting spending, they're doing more of that cutting in North America than they are international. Thank
you very much. Stuart Glickman is director and equity research analyst for SMP Capital i Q speaking about Haliburton and Baker Hughes. They're calling off their twenty eight billion dollar merger. You're listening to taking Stock on Bloomberg Radio. Coming up on taking Stock, a look at Puerto Rico. It's going to default on four hundred and twenty two million dollars from its government Development Bank and a bond payment. What's next for the Commonwealth