GE In Deal To Merge Oil And Gas Business With Baker Hughes - Quick Facts

(RTTNews) - General Electric Co. (GE) announced Monday that it has entered into an agreement to combine its oil and gas business with oilfield services provider Baker Hughes Inc. (BHI).

The companies said the deal will be executed using a partnership structure, pursuant to which GE Oil & Gas and Baker Hughes will each contribute their operating assets to a newly formed partnership. GE will have a 62.5% interest in this partnership and existing Baker Hughes shareholders will have a 37.5% interest through a newly NYSE listed corporation.

Baker Hughes shareholders will also receive a special one-time cash dividend of $17.50 per share at closing. The $7.4 billion contributed by GE to the new partnership will be used to fund the cash dividend to existing Baker Hughes shareholders.

The transaction is expected to close in mid 2017.

The companies expect to generate total runrate synergies of $1.6 billion by 2020.

The deal would create a major oilfield technology provider with a unique mix of service and equipment capabilities. It is expected that the New Baker Hughes will be an equipment, technology and services major in the oil and gas industry with $32 billion of combined revenue and operations in more than 120 countries.

The transaction is expected to add approximately $0.04 to GE earnings per share in 2018, and $0.08 by 2020.

Jeff Immelt, Chairman and CEO of GE will serve as Chairman of the Board of Directors and Lorenzo Simonelli, president and CEO of GE Oil & Gas will serve as President and Chief Executive Officer.