General Electric and Baker Hughes are combining their oil and gas businesses to create a powerful entity in the global energy sector, after being harshly impacted by weak oil prices for a prolonged period.
As per reports of the deal announced today, global industrial giant General Electric will own 62.5% of the new publicly traded company and major oilfield services company Baker Hughes will own the remaining 37.5%.
Baker Hughes shareholders will receive a one-time cash dividend of $17.50 per share.
The boards of both companies have approved the deal, which is expected to close by mid-2017. It still needs approval from Baker Hughes shareholders.
The transaction calls for GE to contribute $7.4bn to Baker Hughes shareholders as a cash dividend.
The new merged entity, which will have dual headquarters in Houston and London, is valued at $14bn, the companies said.
“Oil and gas customers demand more productive solutions. This can only be achieved through technical innovation and service execution, the hallmarks of GE and Baker Hughes,” said GE chief executive Jeff Immelt in a statement.
Lorenzo Simonelli, president and CEO of GE Oil & Gas, will become the new company’s CEO. Immelt will serve as chairman of the board.
