Shareholders jump at Halliburton offer

Shareholders jump at Halliburton offer

	Published : Tue, 03 Apr 2007 18:01 By : Agencies Print this Story

HOUSTON (AP) - Halliburton said Tuesday that the response to its offer to exchange its shares for those of KBR was so overwhelming, it would be able to accept only about 40 percent of the tendered Halliburton stock.

The offer, which expired at midnight Monday, is part of Halliburton Co.'s ongoing bid to separate itself from KBR Inc., the U.S. military contractor and engineering/construction outfit.

Halliburton said nearly 211 million shares have been tendered since March 2 as part of its offer to exchange one share of Halliburton stock for 1.5905 shares of KBR stock. Halliburton had offered to accept about 85.3 million shares.

The oilfield services company said it will accept only a portion of the tendered shares on a prorated basis.

Halliburton stockholders who tendered their shares by delivering a notice of guarantee to exchange agent Mellon Investors Services LLC must deliver the shares and required documents to Mellon by 5 p.m. EDT Thursday.

Shares of Halliburton rose 46 cents to $32.73 in early afternoon trading on the New York Stock Exchange. They have traded in a range of $26.33 to $41.99 in the past year. KBR shares were up 22 cents to $20.91, also on the NYSE. They have traded in a range of $19.66 to $27.63 since their debut in November.

The split of Halliburton and KBR began in November when KBR held an initial public offering that netted about $500 million.

Halliburton retained a roughly 80 percent stake in KBR, though it said at the time it planned to spin off the remainder of KBR to its shareholders by April.

In February, however, Halliburton's board approved a plan that allowed it to unload its KBR shares through a split-off exchange offer.

Bear Stearns analyst Robin Shoemaker has said she considers the exchange offer the preferred method of separating the two companies because, in part, it effectively allows Halliburton to repurchase shares using KBR stock as currency.

Analysts have said KBR, with its lower profit margins, has been a drag on Halliburton earnings. The split, they say, will allow Halliburton to focus on its profitable oilfield-services operations.

KBR reported revenue of $2.5 billion in the fourth quarter of 2006, down from $2.7 billion in the year-ago period -- a decline the company attributed in part to fewer projects with the U.S. military.

Still, Halliburton and KBR have been lightning rods for criticism because of KBR's more than $19 billion in Pentagon contracts to be the sole provider of food and shelter services to the military in Iraq and Afghanistan. Democrats in Congress have claimed KBR benefited from ties to Vice President Dick Cheney, who once led Halliburton.

The U.S. military now wants multiple contractors to provide those services, and KBR is bidding again despite accusations from lawmakers and the Special Inspector General for Iraqi Reconstruction Office the company abused federal rules in record-keeping on the current deal.

Defense analysts predict KBR and a company run by former KBR executives, IAP Worldwide Services, will each win one of the 10-year contracts scheduled to start this year and worth up to a total $50 billion.