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GE and Baker Hughes to form oil field services powerhouse

Monday, October 31, 2016 6:57
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(Before It's News)

Industrial holding company General Electric Company (NYSE:GE) is taking control of oil field services provider Baker Hughes Incorporated (NYSE:BHI).

Shares in Baker Hughes were up 4.5% in pre-market trading as GE confirmed over the weekend that it would merge its oil and gas interests with those of Baker Hughes.

The latter’s shares had shot up from US$54.55 at Thursday’s close to US$59.125 on Friday after GE had confirmed on Thursday that talks between the two were taking place.

GE will own 62.5% of the new joint venture, while Baker Hughes shareholders will hold the remainder. Baker Hughes shareholders will also receive a one-off special cash dividend worth US$17.50 a share.

The new company, which will have more than US$32bn in annual revenue, will be listed on the New York Stock Exchange.

GE is expecting synergies from the merger will add around four cents a share to its earnings in 2018 and twice that amount by 2020.

The board of Baker Hughes has given its assent to the deal, which will see Lorenzo Simonelli, currently chief executive of GE Oil 7 Gas, taken on the same role at the new company, while GE chief executive and chairman, Jeff Immelt, will be the company’s chairman; Martin Craighead, who is both chief executive and chairman at Baker Hughes, will be vice chairman on the board of the new company.

 

Story by ProactiveInvestors

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