HOUSTON (Reuters) - General Electric Co on Monday completed its buyout of Baker Hughes Inc, merging it with its own oil and gas equipment and services operations to create the world’s second-largest oilfield service provider by revenue.
The new company, to be called “Baker Hughes, a GE company,” will begin trading on Wednesday on the New York Stock Exchange under the stock ticker “BHGE.”
With headquarters in London and Houston, the combined company will have roughly $23 billion in annual revenue and offer oilfield gear including blowout preventers, pumps, drilling, chemicals, other products and services for oil producers in 120 countries.
For Baker Hughes, the deal helps it grow in size and become an even-more important player in the industry after antitrust concerns scuttled a tie-up last year with rival Halliburton Co. The GE deal vaults the merged business past Halliburton to rival only Schlumberger NV for dominance in the global oilfield service market.
For GE, the deal will help it focus more on the oil and gas sector, especially in North America, while shielding the parent company’s earnings from the energy industry’s boom and bust cycles. All of GE’s oil and gas-related businesses will be folded into the new company, which will be 62.5 percent owned by GE. Baker shareholders will own the rest and receive a one-time, $17.50 dividend.
The deal, when announced last autumn, was predicated on a recovery in the oil price to $60 per barrel by 2019, an increase that now seems less likely with a glut of crude still circling the globe and keeping prices below $50.
Still, executives at the new company said the combination should help customers better perform if prices stay lower.
“The crystal ball for all of us is cloudy,” said Lorenzo Simonelli, the company’s chief executive, who will relocate to Houston from London.
“But we know energy requirements are still going to increase, globally. The fundamentals are there for energy.”
Analysts and investors generally praised the deal as data analytics and other high-technology operations grow in demand among oil producers.
“The GE-Baker deal will likely move the sector towards embracing Big Data in production optimization,” said Jonathan Garrett of industry consultancy Wood Mackenzie.
The new company will have roughly 70,000 employees and be led by Simonelli and 14 senior executives. Only five of those executives will be legacy Baker Hughes employees, with most from GE.
The company will have access to GE’s research and development facilities and be able to access GE’s Predix software and analytics, Simonelli said.
Reporting by Liz Hampton and Ernest Scheyder; Writing by Ernest Scheyder; Editing by Marguerita Choy