GE to Give Up Majority Control of Baker Hughes
September 10 2019 - 6:00PM
Dow Jones News
By Thomas Gryta
General Electric Co. is giving up majority control of Baker
Hughes, selling shares in the oil-field services firm that will
raise about $3 billion cash but trigger a more-than-$7-billion
accounting charge.
GE executives have said they planned to wind down their stake in
the business, which GE acquired when it merged its struggling oil
and gas division with Baker Hughes in a 2017 deal. The combination
created a new public company that was 62.5% owned by GE.
GE has been selling its stake to both exit the business and
raise cash to pay down its debt load. Last year, GE sold a $4
billion stake and recorded a $2.2 billion loss on the transaction,
which reduced its ownership from 62.5% to 50.2%.
Based on the current share price of Baker Hughes, GE could bring
in about $2.9 billion from the latest sale. With a
105-million-share secondary offering and a $250 million stock-
buyback by Baker Hughes, GE's stake will fall below 40%.
GE will no longer include the financial results of Baker Hughes
with its own and will have to take an accounting charge estimated
to be $7.4 billion as of July 24. The final proceeds and size of
the charge will depend on the offering's pricing.
The charge is necessary because the market value of the Baker
Hughes stake has dropped compared with how GE was carrying it. GE's
stake was worth about $12.5 billion at Tuesday's closing price.
Baker Hughes shares closed Tuesday at $24.11; two years ago the
stock traded at almost $37. The stock fell nearly 4% in late
trading.
A GE spokeswoman pointed to Baker Hughes' regulatory filing and
prior public comments.
(END) Dow Jones Newswires
September 10, 2019 18:45 ET (22:45 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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