GE said an agreement has been reached to combine its oil and gas unit with Baker Hughes creating an oil and gas productivity service giant.
Under the terms of the agreement, at the closing of the transaction Baker Hughes shareholders will receive a special one-time cash dividend of US$17.50 per share and 37.5 percent of the new company, while GE will own 62.5 percent of the company.
According to GE’s statement, the combination will merge GE’s fullstream oil and gas manufacturing and technology solutions spanning across subsea & drilling, rotating equipment, imaging and sensing and Baker Hughes portfolio in drilling & evaluation and completion & production, moving beyond oilfield services into oil and gas productivity solutions.
The US$7.4 billion contributed by GE to the new partnership will be used to fund the cash dividend to existing Baker Hughes shareholders.
Jeff Immelt, chairman and CEO of GE, said, “This transaction accelerates our capability to extend the digital framework to the oil and gas industry.”
The new company will be headquartered in Houston, Texas ad London, UK.
Upon closing, the new Baker Hughes board will consist of nine directors, five of whom, including chairman Jeff Immelt, will be appointed by GE and four, including vice chairman Martin Craighead, will be appointed by Baker Hughes.
The transaction is expected to close in mid 2017, GE said.