GE Oil & Gas and Baker Hughes completed their planned merger, which will create an entity that offers GE’s digital solutions and Baker Hughes domain expertise as oilfield services provider.
|Source: Baker Hughes|
The new company, which will trade under the stock symbol BHGE, will be an industry leader positioned to deliver in any economic environment and assist customers in driving productivity, said Jeff Immelt, chairman and CEO of GE and chairman of BHGE.
Lorenzo Simonelli, president and CEO of Baker Hughes, a GE company, said: “Disruptive change is the world’s new normal. We created BHGE because oil and gas customers need to withstand volatility, work smarter, and bring energy to more people—and our offering to them is now different than any other in the industry. Ours is a new company that brings together over a century of experience and is built on invention, execution and the quality of our people and culture.”
BHGE’s global organization will have approximately 70,000 people, operations in more than 120 countries, offer four product companies —Oilfield Services, Oilfield Equipment, Turbomachinery and Process Solutions, and Digital Solutions—and 24 product lines and segments. BHGE will also have dual headquarters in Houston and London.
The closure of the merger comes three days after 99% of Baker Hughes stockholders approved the merger, and a little over two weeks since the US Department of Justice approved the merger. Terms of the agreement call for GE to have a 62.5% interest in this partnership and legacy Baker Hughes shareholders have a 37.5% interest through their ownership of BHGE.
Former Baker Hughes shareholders, whose shares converted into shares of Class A common stock of BHGE in the transaction, are also entitled to receive a special one-time cash dividend of US$17.50 per share (to be paid on 6 July 2017). $7.4 billion was contributed by GE to the new partnership, which will be used to fund the cash dividend to legacy Baker Hughes shareholders, GE said.
Wood Mackenzie’s E&P research director Jonathan Garrett said that the deal is a positive for the industry, and in particular, the preventative maintenance side.
“In the last few years, industry has taken great strides to make drilling and well completion more cost-effective and productive, BHGE will likely move the sector towards embracing Big Data in production optimization,” Garret said.
He added: “The engineers at GE are top-notch at installing sensors and data gathering equipment in order to allow software to make operations more efficient and predict when certain components need to be serviced or might soon encounter a problem. The ramifications for cost reductions are huge as prevention is cheaper than remedy. Baker Hughes brings deep oilfield expertise as one of the top three in the space.”