GE Deal With Baker Hughes Creates $32 Billion Oil Behemoth
Source: Bloomberg Markets
General Electric Co. agreed to combine its oil and gas business with Baker Hughes Inc., creating an industry giant with a broader suite of offerings amid the ongoing slump in crude prices.
GE will own a 62.5 percent stake in the combined provider of oilfield services, which will be publicly traded and have $32 billion in sales, the companies said Monday in a statement. GE will contribute $7.4 billion to fund a special dividend of $17.50 a share to Baker Hughes stockholders.
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Oilfield contractors are increasingly forming partnerships to help cut costs and expand their offerings and distribution channels amid the downturn. The moves have come into favor as customers seek ways to improve efficiency and get greater value out of the services and gear needed to suck crude out of the ground.
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Nabors Industries Ltd. on Monday announced plans to form a joint venture with Saudi Aramco to own, manage and operator onshore drilling rigs, a move mirroring efforts across the industry to use partnerships to better manage operations through the downturn. GE earlier this year entered into cooperation agreements in other areas with National Oilwell Varco Inc. and Diamond Offshore Drilling Inc.
Read more: http://www.bloomberg.com/news/articles/2016-10-31/ge-to-merge-oil-division-with-baker-hughes-in-bet-on-energy
