GE announces plan to sell Baker Hughes
General Electric reports that it has a deal to start selling its ownership of Baker Hughes sooner than expected.
HOUSTON and BOSTON – General Electric reports that it has a deal to start selling its ownership of Baker Hughes sooner than expected, according to the Houston Chronicle.
According to the report, the deal undoes the lockup agreement that ensures that GE maintains its ownership of the Houston oilfield services firm until July 2019. However, GE said the new deal – negotiated through a conflict committee – still requires that GE own a majority stake in Baker Hughes for another six months.
GE has seen its stock value decline in the last couple of years, which then led to the appointment of a new chief executive, Larry Culp, in October. These changes in turn have led GE to pursue a downsizing and asset sale strategy.
"Earlier this year we announced our intent to pursue an orderly separation from BHGE. The agreements announced today accelerate that plan in a manner that mutually benefits both companies and their shareholders," Culp was quoted to say.
Baker Hughes CEO Lorenzo Simonelli, who came to the company from GE Oil & Gas, said the new agreement gives clarity to customers, shareholders and employees. The company's financial outlook is unchanged, he said.
GE agreed to acquire a majority of Baker Hughes in late 2016 by merging GE's oil and gas division with the Houston oilfield services company.
Culp and Simonelli said the new deal includes a joint venture agreement for GE and Baker Hughes to continue collaborating and sharing technology on oilfield equipment with GE's power generation and aviation divisions.