Övünç Kutlu
31 October 2016•Update: 01 November 2016
By Ovunc Kutlu
NEW YORK
A deal to combine American conglomerate General Electric's oil and gas business with oilfield services firm Baker Hughes is expected to create a $32 billion company, according to a joint statement Monday.
The agreement was unanimously approved by the boards of directors of both companies and the deal is expected to close in mid-2017. General Electric will pay $7.4 billion to existing Baker Hughes shareholders.
The new company will be publicly traded on the New York stock exchange and 62.5 percent will be owned by General Electric and 37.5 percent will be held by Baker Hughes’ shareholders.
After the announcement of the deal, General Electric stock price gained 1.5 percent to $29.65 on Wall Street. Stocks of Baker Hughes, however, fell 3.9 percent to as low as $56.78.
The agreement is expected to help Baker Hughes, which has been struggling in an environment of low oil prices and downturn in the oil industry worldwide.
For General Electric, the deal provides the firm's oil and gas segment use of Baker Hughes' expertise, equipment and employees, according to experts.
Baker Hughes had accepted an acquisition offer by rival Halliburton for $35 billion in 2014. That deal was not approved by the Justice Department citing antitrust concerns.
General Electric saw its net income decline 19.1 percent to $2.03 billion in the third quarter year-over-year, but its revenue rose 4.4 percent to $29.27 billion.
Baker Hughes net loss widened to $429 million in the third quarter, while revenues fell 37 percent to $2.4 billion.
