The 5.6% increase in the Houston-based Baker Hughes's stock over the last four weeks, settling near $55 when markets closed on Monday, compares with 67% slide in the Market Vectors Oilfield Services ETF (OIH) , which includes 26 of the leading oilfield services companies. The drop has been fueled by the deteriorating crude prices which touched their five-year lows on Monday.
Must Read: Warren Buffett's Top 10 Dividend Stocks
But overall, the Baker Hughes's shares are up 3.2% year to date, thanks to the recent upswing which came on the back of Halliburton's decision to acquire Baker Hughes for nearly $35 billion in cash and stock.
The deal would alter the competitive landscape in the oilfield services industry, creating the biggest player in terms of 2014 revenues, a market leader in North America and the second biggest oilfield services company in other parts of the world, after Schlumberger (SLB) . The two companies expect the transaction to close by the second half of next year.
Melanie Kania, Baker Hughes's spokesperson, was not available for comment during press time.
That said, the deal raises antitrust concerns and therefore, it would require approvals from various regulatory bodies from all around the world, including the U.S. Europe, China and Brazil. To alleviate such fears, Halliburton has agreed to sell $7.5 billion of revenue generating assets but in last week's report, Oppenheimer's analyst James Schumm predicted that the divestitures will be likely around $5 billion.
Schumm says that although the deal faces "above average risk" of being blocked by a regulatory agency, there is still a 75% chance of a successful merger. A merger would strengthen Halliburton in the production chemicals market, give the company "much-needed exposure" in the robust artificial lift market and will allow the company to ramp-up competition against its bigger rival Schlumberger internationally.
Must Read: 12 Stocks Warren Buffett Loves in 2014