GE Oil & Gas, the oil and gas equipment and services division of American industrial technology behemoth General Electric Co (GE), last week announced completing its acquisition of rival Baker Hughes Inc.
The merger is estimated to have created the world’s second-largest oilfield services provider by revenue. The new company, to be called ‘Baker Hughes, a GE company’, has begun trading on the New York Stock Exchange since last week under the stock ticker ‘BHGE’.
‘The new company is the first and only to bring together industry-leading equipment, services and digital solutions across the entire spectrum of oil and gas development’, according to a media statement issued by the merged entity.
With headquarters in both London and Houston, the combined company will have roughly $23bn in annual revenue and offer oilfield gear including blowout preventers, pumps, drilling, chemicals, other products and services for oil producers in about 120 countries.
For Baker Hughes, the deal helps it grow in size and become an even-more important player in the industry after antitrust concerns scuttled a tie-up last year with rival Halliburton.
The GE Oil & Gas deal vaults the merged business past Halliburton to rival only Schlumberger for dominance in the global oilfield service market.
For GE, the deal will help it focus more on the oil and gas sector, especially in North America, while shielding the parent company’s earnings from the energy industry’s boom and bust cycles.
All of GE’s oil and gas-related businesses will be folded into the new company, which will be 62.5% owned by GE. Baker shareholders will own the rest and receive a one-time, $17.50 dividend.
The integration of the Russian businesses will be completed upon receipt of Russian regulatory approval, according to the statement received by arabianoilandgas.com.
The combined organisation will command a global workforce of about 70,000 and offer a ‘fullstream’ portfolio that is focussed on four key oil and gas verticals — oilfield services, oilfield equipment, turbomachinery and process solutions, and digital solutions — apart from 24 other product lines and segments.
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“Disruptive change is the oil and gas industry’s new normal. We created BHGE because oil and gas customers need to withstand volatility, work smarter and bring energy to more people,” Lorenzo Simonelli, the GE Oil & Gas CEO, who has now become the chief executive of BHGE, said. “Our offering is further differentiated from any other in the industry across the value stream and enables and assists our customers in driving productivity, while minimising costs and risks.”
The company will have access to GE’s research and development facilities and be able to access GE’s Predix software and analytics, Simonelli said.
The new company will be led by Simonelli and 14 senior executives. Only five of those executives will be legacy Baker Hughes employees, with most from GE Oil & Gas. BHGE brings together over 125 years of experienced talent in the oil and gas industry.
“BHGE has proven technologies and experience with the spirit of a startup, and our leadership team looks forward to quickly demonstrating the strengths of the new company. Our focus is on integrating our businesses quickly and seamlessly so we can drive long-term value for all of our stakeholders,” Simonelli said.
Its highly experienced executive team, which has drawn on the talent and expertise inherent in both predecessor businesses, is well positioned to guide and support the organisation for success. As previously announced, GE chairman and CEO Jeffrey Immelt is serving as chairman of the Board of Directors of Baker Hughes, a GE company, and Martin Craighead, former chairman and CEO at Baker Hughes, has been named as the vice chairman of the Board.
Commenting on the mega-merger, GE chairman and CEO Immelt said: “BHGE can help our customers be more productive in any cycle, especially today’s. It’s a smart deal for our combined customers, shareholders and employees. Lorenzo and his team are world-class leaders and will focus on accelerating the company’s capability to extend the digital framework in ways oil and gas customers have never seen before. The completion of the transaction marks a new era in the industry, and I am extremely proud of our team’s focus, dedication and diligence, which resulted in the completion of this combination in just eight months.”
The deal, when announced in October last year, was predicated on a recovery in the oil price to $60 per barrel by 2019. Executives at the new company said the combination should help customers better perform if prices stay lower.
“The crystal ball for all of us is cloudy,” said Lorenzo Simonelli, the company’s chief executive, who will relocate to Houston from London.
“But we know energy requirements are still going to increase, globally. The fundamentals are there for energy.”
