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GE cuts down Baker Hughes stake
US
CONGLOMERATE GE has offloaded another portion of its stake in Baker Hughes, taking its interest in the oilfield services company to below 50%. The deal drew about $3bn in net proceeds to GE after the underwriters fully exercised their options. Including the shares sold via under- writer options, the sale totalled 132.25mn shares in Baker Hughes, at $21.50 per share.
Baker Hughes’ repurchase of about 11.87mn shares of its own Class B stock from GE for a total of $250mn also closed. Together, the deals have reduced GE’s voting power over Baker Hughes to 36.8% and it has lost four of its five seats on the latter’s board.
As a result, the oilfield service provider will change its name from Baker Hughes, a GE company (BHGE) to Baker Hughes Co., while its stock ticker symbol on the New York Stock Exchange (NYSE) will change from BHGE to BKR.
Baker Hughes’ CEO, Lorenzo Simonelli, said there would be no changes to the company’s day- to-day operations. “Today’s transaction marks an important milestone in our journey, and we have an exciting future ahead built on a strong foundation,” Simonelli said. “We are a differ- entiated energy technology company and our unique value proposition positions us well with
our customers and in the market.”
GE’s latest sell-off comes only two years after
the conglomerate bought Baker Hughes in July 2017. A year later, GE announced that it would fully separate from its oilfield service subsidiary, selling down its 62.5% stake over the subsequent 2-3 years in an attempt to cut its debt.
GE was initially unable to sell any of the shares until July 2019 under a lock-up agreement it had in place, but Baker Hughes allowed it to drop that commitment. In return, GE agreed to allow Baker Hughes to continue using its soft- ware and made commitments on a number of other issues, including pensions, tax and inter- company services costs.
This move allowed GE to start selling down its stake in Baker Hughes in late 2018, reducing it to 50.4%. The remaining stake was locked up for a further six months. But while the conglom- erate has struggled with losses, Baker Hughes reported a $581mn profit on nearly $23bn of revenue during 2018. Nonetheless, GE has opted to focus on a narrower group of core businesses, which include power, renewable energy and jet engines. It was previously announced that GE would also spin off its medical equipment business, GE Healthcare, but plans for an initial public offering (IPO) have since been shelved.
Baker Hughes reported a $581mn profit
on nearly $23bn of revenue during 2018.
GE’s latest sell- off comes only two years after the conglomerate bought Baker Hughes in July 2017.
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