GENERAL General Electric Co (GE.N) said on Monday it would merge its oil and gas business with Baker Hughes Inc (BHI.N), creating the world’s second-largest oilfield services provider as competition heats up to supply more-efficient products and services to the energy industry after several years of low crude prices.
The deal to create a company with $32 billion in annual revenue will combine GE’s strengths in making equipment long-prized by oil producers with Baker Hughes’s expertise in drilling and fracking new wells.
Shares of Baker Hughes were down nearly seven per cent, a drop that executives said likely was because of the deal’s complicated structure.
“This is a good deal for all of the investors,” said Lorenzo Simonelli, head of GE’s oil and gas business who will lead the new entity, to be called “Baker Hughes, a GE company.”
GE is already the world’s largest oilfield equipment maker, supplying blowout preventers, pumps and compressors used in exploration and production. The new company will vault Baker Hughes’s market share ahead of rival Halliburton Co.
