Baker Hughes to go it alone as GE confirms plan to unload
Jun. 26, 2018 7:28 PM • SA Editor Carl Surran
Less than a year after General Electric (NYSE:GE) merged its oil and gas business with Baker Hughes (NYSE:BHGE), the company is bailing out of the deal, planning to sell its 62.5% stake in the combined firm over 2-3 years as part of a larger move to simplify its business and reduce debt.
After losing more than 40% of its market value since the tie-up, Baker Hughes is set to find itself in much the same place it was at the beginning: battling oil services giants Schlumberger (NYSE:SLB) and Halliburton (NYSE:HAL) for customers and contracts.
But "the old Baker Hughes structure has been torn apart," as GE managers initially took 11 of the combined firm’s top 15 posts and ushered in a by-the-book culture that was at odds with the oil industry, which prizes relationships and handshake deals, Reuters reports, citing people who dealt with both companies.
GE likely will divest its interest through a series of share sales rather than a corporate buyout, says Seaport Global's Sonny Randhawa, since “the only buyers would be Halliburton or Schlumberger and neither of those would get regulatory approval. I don’t think there’s another entity coming in to buy Baker Hughes.”