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GE Completes Merger of Oil & Gas Unit with Baker Hughes

Redefining the sector dynamics, industrial goods manufacturer General Electric Company GE completed the merger of its Oil & Gas business with Baker Hughes Incorporated BHI to form an industry leader with an unrivalled mix of service and equipment capabilities.

However, this multi-billion deal received lackluster response from investors as General Electric’s shares increased a mere 1.6% to close at $27.45 yesterday.

The Deal

Under the terms of the agreement, GE Oil & Gas and Baker Hughes formed a new entity (the “New” Baker Hughes – a General Electric company) using a partnership structure, following which both the parties contributed their operating assets to the newly formed partnership. General Electric owns the majority stake of 62.5% in the new company and the remainder is held by the erstwhile Baker Hughes shareholders, who will also receive a special one-time cash dividend of $17.50 per share on Jul 6. General Electric has contributed about $7.4 billion to the new partnership to fund the dividend.

The “New” Baker Hughes, to be listed as BHGE...