Activist Investor ValueAct Hints at Plans for Baker Hughes -- Update

By Lisa Beilfuss 

ValueAct Capital Management on Tuesday hinted at its intentions for Baker Hughes Inc., which is awaiting regulatory approval for a tie-up with Halliburton Co., after the activist investor took a roughly 5% stake in the oil-field servicer earlier this year.

In a regulatory filing, ValueAct said it believes shares are undervalued and, as such, the firm intends to discuss with Baker Hughes's board ways to enhance shareholder value--including potentially adding a ValueAct representative to the company's board. ValueAct said it would also discuss the company's mergers and acquisitions strategy, executive compensation and capital allocation, among other items.

ValueAct in its filing didn't mention Halliburton or the pending merger. Shares of Baker Hughes closed Monday at $54.63, below the $61.23 at which Halliburton's cash-and-stock offer valued shares.

Representatives for Baker Hughes and ValueAct weren't immediately available for comment.

In January, ValueAct disclosed a 5.1% stake in the Houston company for about $1.22 billion. The position now stands at 5.3%. When ValueAct first revealed its stake, it didn't indicate its motives.

The investment came after Baker Hughes agreed to be acquired by larger rival Halliburton for about $35 billion. Last month, the companies unveiled further divestiture proposals to help complete the deal.

ValueAct, a roughly $15 billion San Francisco hedge fund, typically likes to work behind the scenes with management rather than fight publicly like many activists. The firm garnered attention in 2013 when it secured a board seat at Microsoft Corp., despite holding less than 1% of the stock, marking the first time the software giant appointed an activist shareholder to its board.

Other ValueAct targets include Motorola Solutions Inc., Adobe Systems Inc. and CBRE Group Inc.

In early trading, shares in Baker Hughes were up 1.4% and Halliburton shares rose 2.7% as crude-oil prices rose.

Write to Lisa Beilfuss at [e-mail]

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October 06, 2015 10:18 ET (14:18 GMT)

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