The transaction, which is expected to close in mid-2017, will see Baker Hughes shareholders receive a one-time cash dividend of $17.50 per share and 37.5% of the new company; GE will own 62.5% of the company.
The “New” Baker Hughes aims to leverage the digital solutions, manufacturing expertise and technology from the GE Store, combined with the powerful track record that Baker Hughes has in the oilfield services sector.
“This transformative transaction will create a powerful force in the oil and gas market as we continue to drive long-term value for our customers and shareholders,” said Lorenzo Simonelli, current president/CEO of GE Oil & Gas, who will also serve as president/CEO of the combined company.
“We expect Predix to become an industry standard and synonymous with improved customer outcomes,” added Jeff Immelt, chairman and CEO of GE, who will serve as the chairman of the board of the combined company.
“GE investors will benefit through ownership of a stronger business with substantial synergies and an improved competitive position. The transaction is expected to add approximately $.04 to GE EPS in 2018, $.08 by 2020,” Immelt said.
Assets and financial structure
The product portfolio of GE Oil & Gas and Baker Hughes in drilling, completions, production and midstream / downstream equipment and services will create the second largest player in the oilfield equipment and services industry.
From GE’s fullstream oil and gas manufacturing and technology solutions spanning across subsea & drilling, rotating equipment, imaging and sensing to the Baker Hughes portfolio in drilling & evaluation and completion & production, the combined company will be moving beyond oilfield services and into oil and gas productivity solutions.
The companies expect to generate total runrate synergies of $1.6 billion by 2020, which has a net present value of $14 billion.
In addition to Simonelli’s and Immelt new executive roles, Martin Craighead, who currently serves as chairman/CEO of Baker Hughes, will be the new company’s vice chairman of the board. The remainder of the executive leadership team will be a combination of existing leaders from both companies.
The new Baker Hughes will have dual headquarters in Houston, Texas and London.