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Baker Hughes (BHI) Inks Deal with GE to Form $32B Entity
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Baker Hughes Incorporated recently entered into a deal with General Electric Company (GE - Free Report) , per which the latter will combine its oil and gas business with the former. The merger will create the second-largest oilfield service player in the world.
The merger is in sync with the growing demand from upstream players for more efficient oilfield services amid intense competition and the persistent weakness in oil prices since mid-2014. The newly formed entity will combine the strength of General Electric with the expertise of Baker Hughes in fracking new wells.
The combined entity is projected to generate revenues of more than $32 billion, annually. The complementary products of the involved companies are anticipated to provide better solutions to customers alongside creating cost synergy. In fact, Baker Hughes and General Electric projected yearly cost savings of $1.2 billion in 2020 and beyond. Moreover, the diversified asset base of the merged entity is expected to cushion it against any downturn in the energy market.
While shareholders of Baker Hughes will hold 37.5% of the new entity, the remaining 62.5% interest will be held General Electric investors. The merged entity will trade publicly in the New York Stock Exchange. With a significant ownership in the new partnership, Baker Hughes is set benefit substantially in the long run. Another positive for Baker Hughes is that its shareholders will likely get one time special dividend of $17.50 per share as part of the accord.
With the completion of the transaction – anticipated by the mid of 2017 – the combined entity will likely be bigger in size than Halliburton Company (HAL - Free Report) , which is currently the second-largest oilfield company. The newly formed company will also pose competition to Schlumberger Limited (SLB - Free Report) , the largest oilfield services firm in the world.
Houston, TX-based Baker Hughes is one of the major oilfield service companies in the world that provides an array of services to the global oil and gas industry.
General Electric, which currently has a Zacks Rank #4 (Sell), is one of the largest and the most diversified technology and financial services firms in the world. The oil and gas business of the company provides highly developed technology equipment and services to onshore, offshore and sub-sea oil & gas projects.
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Baker Hughes (BHI) Inks Deal with GE to Form $32B Entity
Baker Hughes Incorporated recently entered into a deal with General Electric Company (GE - Free Report) , per which the latter will combine its oil and gas business with the former. The merger will create the second-largest oilfield service player in the world.
The merger is in sync with the growing demand from upstream players for more efficient oilfield services amid intense competition and the persistent weakness in oil prices since mid-2014. The newly formed entity will combine the strength of General Electric with the expertise of Baker Hughes in fracking new wells.
The combined entity is projected to generate revenues of more than $32 billion, annually. The complementary products of the involved companies are anticipated to provide better solutions to customers alongside creating cost synergy. In fact, Baker Hughes and General Electric projected yearly cost savings of $1.2 billion in 2020 and beyond. Moreover, the diversified asset base of the merged entity is expected to cushion it against any downturn in the energy market.
While shareholders of Baker Hughes will hold 37.5% of the new entity, the remaining 62.5% interest will be held General Electric investors. The merged entity will trade publicly in the New York Stock Exchange. With a significant ownership in the new partnership, Baker Hughes is set benefit substantially in the long run. Another positive for Baker Hughes is that its shareholders will likely get one time special dividend of $17.50 per share as part of the accord.
With the completion of the transaction – anticipated by the mid of 2017 – the combined entity will likely be bigger in size than Halliburton Company (HAL - Free Report) , which is currently the second-largest oilfield company. The newly formed company will also pose competition to Schlumberger Limited (SLB - Free Report) , the largest oilfield services firm in the world.
Houston, TX-based Baker Hughes is one of the major oilfield service companies in the world that provides an array of services to the global oil and gas industry.
BAKER-HUGHES Price
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General Electric, which currently has a Zacks Rank #4 (Sell), is one of the largest and the most diversified technology and financial services firms in the world. The oil and gas business of the company provides highly developed technology equipment and services to onshore, offshore and sub-sea oil & gas projects.
Baker Hughes currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>