GE and Baker Hughes agree to create a new fullstream digital industrial services company that is set to be a leader in oil and gas productivity
On 31 October 2016, GE Oil and Gas and Baker Hughes announced their plans to create a "new" Baker Hughes. The merged business it set to be called "Baker Hughes, a GE Company." The organisation will be 62.5 per cent GE owned while Baker Hughes shareholders are to own 27.5 per cent of the new company.
According to GE, it will contribute US$7.4bn to fund the US$17.50 per share special dividend scheme to existing Baker Hughes shareholders. The deal still requires regulatory approval, as two years ago, Halliburton were set to buy Baker Hughes but the deal collapsed in May after the US antitrust regulators objected because of concerns of impacts of competition. However, the deal is expected to go through as there is less of an overlap with Baker Hughes and GE's operations as there were were Halliburtons.
GE stated that "The New' Baker Hughes will be a leading equipment, technology and services provider in the oil and gas industry with US$32bn of combined revenue (according to 2015 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 provide best-in-class physical and digital technology solutions for customer productivity."
Jeff Immelt, chairman and chief executive officer of GE said “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."
"As we built the GE Oil and Gas business, I have always been impressed by the respect our customers have for Baker Hughes. GE Oil and 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. An oilfield service platform is essential to deliver digitally enabled offerings to our customers."