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GE to give up majority stake in Baker Hughes

US conglomerate and oilfield services firm move forward with plans to separate

GE is set to lose its majority stake in Baker Hughes through a recently launched stock repurchase, according to a Tuesday release.

Under the plan, GE will sell off 105 million shares of class A stock in Baker Hughes, while the oilfield services subsidiary will simultaneously repurchase $250 million in shares of its class B common stock in a privately negotiated transaction.

GE to sell off Baker Hughes

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"Upon completion of the offering, GE and its affiliates will cease to hold more than 50% of the voting power of all classes of Baker Hughes’ voting stock," according to a release issued Tuesday.

With its loss of a majority stake in Baker Hughes, the number of GE-aligned members on Baker Hughes' board will be cut from five to one. GE intends to keep John Rice as its designee and expects directors Jamie Miller and James Mulva to resign. Meanwhile, Baker Hughes chief executive Lorenzo Simonelli and lead director W Geoffrey Beattie are expected to continue to serve on the Baker Hughes board of directors without the GE designation.

GE and Baker Hughes step closer to break-up

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GE originally acquired Baker Hughes in a $7.4 billion deal that was finalised in 2017 as part of a diversification push, combining it with its existing oil and gas business, GE Oil & Gas, to form BHGE.

However, less than a year after completing the combination process, GE made a major strategic shift, saying it would pursue a renewed focus on its core businesses of aviation, power and renewable energies, aiming to raise more cash and pay down debt.

Baker Hughes said it would fund the share repurchase with cash on hand and "other available sources of liquidity", according to a release. Both GE's offering and Baker Hughes' share repurchase have been unanimously approved by the Baker Hughes board.

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