(AP)

Forget lightbulbs, General Electric is trying to become a major player in Big Oil

The merger between GE and Baker Hughes could create one of the largest oilfield services providers in the world


Matthew Rozsa
October 31, 2016 9:30PM (UTC)

General Electric Co. is about to announce a nearly $30 billion merger to combine its oil and gas business with Baker Hughes Inc, the third-largest oilfield services provider in the world.

If the merger goes through, it would allow GE to create a publicly traded corporation that would have revenue of more than $25 billion. Although The Wall Street Journal (which initially reported on this story) couldn't learn the exact terms of the deal, Baker Hughes confirmed on Friday that it was in discussions with GE.

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The new corporation could compete against rivals like Schlumberger Ltd, which is currently the largest oilfield services industry based on revenue. Baker Hughes shareholders will receive a one-time cash dividend of $17.50 per share and an aggregate of 37.5 percent of the new company, compared to GE's 62.5 percent. GE hopes the deal, which is expected to close in mid-2017, will add 4 cents to their earnings per share by 2018 and 8 cents by 2020.

There is little question that GE hopes this news will also serve as a jolt to its flagging businesses. Although its third quarter saw some minor improvement — most notably in that U.S. rig and well counts had increased from the previous three months — service orders had declined across all of GE's oil businesses.

"This transaction creates an industry leader, one that is ideally positioned to grow in any market," explained GE's CEO Jeff Immelt in a statement. "Oil and gas customers demand more productive solutions. This can only be achieved through technical innovation and service execution, the hallmarks of GE and Baker Hughes."

Concerns about GE's new acquisition will no doubt by heightened by the company's already frightening reach. Among other things, GE is one of the nation's largest defense contractors, having been awarded more than $28 billion in defense contracts since 2007.


Matthew Rozsa

Matthew Rozsa is a breaking news writer for Salon. He holds an MA in History from Rutgers University-Newark and is ABD in his PhD program in History at Lehigh University. His work has appeared in Mic, Quartz and MSNBC.

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Related Topics ------------------------------------------

Baker Hughes Big Oil Energy General Electric Military-industrial Complex

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