GE, Baker Hughes createworld’s leading industrial services company

GE, Baker Hughes to create the world’s leading industrial services company

9:25 AM, 2nd November 2016
Jeff Immelt, CEO of GE speaks during a news conference. © Wall Street Journal
Jeff Immelt, CEO of GE speaks during a news conference. © Wall Street Journal

BOSTON, HOUSTON/US: General Electric (GE) and Baker Hughes (BHI) have entered into an agreement to combine GE’s oil and gas business and Baker Hughes to create a world-leading oilfield technology provider with a unique mix of service and equipment capabilities.

The new Baker Hughes will be a foremost equipment, technology and services provider in the oil and gas industry with $32 billion of combined revenue and operations in more than 120 countries. By drawing from GE technology expertise and Baker Hughes capabilities in oilfield services, the new company will deliver best-in-class physical and digital technology solutions for customer efficiency.

As per the agreement, which has been consistently approved by the boards of directors of both companies, at the closing of the transaction Baker Hughes shareholders will receive a special one-time cash dividend of $17.50 per share and own 37.5 percent of the new company. GE will own the rest 62.5 percent of the company. The transaction is expected to close in mid-2017.

The new Baker Hughes will have dual headquarters in Houston, US and London, UK. 

Change in management and board of directors

  • Jeff Immelt, chairman and CEO of GE will serve as chairman of the board of directors
  • Lorenzo Simonelli, president and CEO of GE oil & gas will serve as president and chief executive officer.
  • Martin Craighead, Baker Hughes chairman and CEO, will serve as vice chairman of the board.
  • The remainder of the executive leadership team will be a combination of existing leaders from both GE and Baker Hughes.

Upon closing, the new Baker Hughes board will consist of nine directors: five of whom, including chairman Jeff Immelt, will be appointed by GE and four, including vice chairman Martin Craighead will be appointed by Baker Hughes.

“This contract creates an industry pioneer, one that is ideally positioned to grow in any market. Oil & gas customers demand more productive solutions. This can only be achieved through technical innovation and service execution, the hallmarks of GE and Baker Hughes. This deal is expected to add approximately $.04 to GE EPS in 2018, $.08 by 2020,” said Jeff Immelt.

“This combination of our corresponding resources will make a platform capable of seamless integration while we improve our capacity to deliver advanced and integrated solutions and increase touch points with our customers. Likewise, 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,” added Martin Craighead.

“Both organizations' employees will benefit significantly from being part of a larger, stronger company that is positioned for long-term growth. We look forward to combining the digital solutions and technology from the GE Store with the domain expertise of Baker Hughes and its culture of innovation in the oilfield services sector,” added Lorenzo Simonelli.

Centerview Partners, Morgan Stanley is acting as financial advisor and Shearman & Sterling is acting as legal advisor to GE. Goldman Sachs & Co is serving as financial advisor while Davis Polk is acting as legal advisor to Baker Hughes.

© Worldofchemicals News

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