GE to reduce stake in Baker Hughes from 62.% to 38.4%. Credit: skeeze from Pixabay.

Energy company General Electric (GE) has announced that it has begun to sell off its entire stake in oil and gas company Baker Hughes, with whom it merged its own oil and gas business with in 2017.

According to reports, GE will initially bring its stake in the company down from 62.5% to 38.4% in a move that it expects will generate $2.7bn in funding.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

As part of this, GE has made a public offering of 115 million shares of Baker Hughes’ Class A common stock at a price of $21.50 each and will also sell $250m of Baker Hughes’ Class B common stock. GE will still have a controlling stake in the company but will eventually sell that too.

GE CEO Lawrence Culp said: “Reducing GE’s ownership in Baker Hughes continues our efforts to improve our financial position by generating approximately $2.7bn in net proceeds to GE. This offering builds on several recent deleveraging steps we have taken, and we will continue to take action in 2019 and 2020 to achieve our leverage targets.”

As a result of the news, GE’s stock rose by over 2% from $9.14 to $9.36 a share, giving it a current market capitalisation value of $81.7bn. The company’s share had peaked at $10.88 a share on 27 February, but fell to $8.01 on 16 August after financial investigator Harry Markopolos accused the company of accounting fraud.

GE share price in 2019

GE Chart by TradingView


Meanwhile Baker Hughes’ share price dropped by over 7.5% from $24.11 to $22.29 a share, some way down from the company’s peak of $28.46 a share on 21 March.

Baker Hughes share price in 2019

BHGE Chart by TradingView


GE restructuring

Under CEO Lawrence Culp, GE has begun a process of restructuring its businesses by selling off a number of its assets to cut the company’s debt, which was estimated to be $115bn towards the end of 2018.

In its 2019 second quarter (Q2) results, GE’s oil and gas assets made $6bn in revenue, giving it an adjusted profit of $217m. According to data analytics company GlobalData, GE made a total loss of over $20bn in 2018.

Baker Hughes

Operating in the US and a key part of GE since 2017, Baker Hughes operates 1045 rigs in the US and Canada alongside 1138 across the rest of the world.

In 2018 the company had a revenue of $22.8bn with a net income of $195m, it currently has a market capitalisation value of $23.1bn.