GE to Combine Oil Business with Baker Hughes
Baker Hughes shareholders will own 37.5 percent of the new company while GE will own 62.5 percent. They expect the deal to close in mid-2017 and the resulting company to be well positioned as the oil and gas industry recovers.
General Electric and Baker Hughes announced Oct. 31 that they have entered into an agreement to combine GE's oil and gas business with Baker Hughes to create a world-leading oilfield technology provider with $32 billion of combined revenue and operations in more than 120 countries.
Unanimously approved by the boards of both companies, the deal will provide a one-time cash dividend of $17.50 per share to Baker Hughes shareholders when the transaction closes, and those shareholders will own 37.5 percent of the new company while GE will own 62.5 percent. They expect the deal to close in mid-2017 and the resulting company to be well positioned as the oil and gas industry recovers.
Baker Hughes unsuccessfully sought to combine with Halliburton Co. recently amid a prolonged slump for the oilpatch. GE held talks earlier this year about buying pieces of Baker Hughes that would have been divested as part of that failed transation, Bloomberg reported.
"This transaction creates an industry leader, one that is ideally positioned to grow in any market. Oil and gas customers demand more productive solutions. This can only be achieved through technical innovation and service execution, the hallmarks of GE and Baker Hughes," said Jeff Immelt, chairman and CEO of GE. "As we built the GE Oil & Gas business, I have always been impressed by the respect our customers have for Baker Hughes. GE Oil & Gas is a key GE business, one that fully leverages the GE Store. As we go forward, this transaction accelerates our capability to extend the digital framework to the oil and gas industry."
Martin Craighead, chairman and CEO of Baker Hughes, said the deal "brings together best-in-class oilfield equipment manufacturing and services, and digital technology offerings for the benefit of all customers and stakeholders. The combination of our complementary assets will create a platform capable of seamless integration while we enhance our ability to deliver optimized and integrated solutions and increase touch points with our customers. In addition, Baker Hughes shareholders will receive a special one-time cash dividend of $17.50 per share and benefit from the upside of a stronger, larger business. With employees of Baker Hughes and GE Oil & Gas coming together, the new company will be an industry leader, well-positioned to compete in the oil and gas industry while pushing the boundaries of innovation for our customers."