GE accelerates Baker Hughes exit plan with stake sale
(Reuters) - General Electric Co (GE.N) is selling a part of its stake in oilfield services provider Baker Hughes (BHGE.N), the U.S. industrial conglomerate said on Tuesday, its latest move to raise cash and repay debt.
GE, which bought Baker Hughes in July 2017, has been selling off assets and cutting costs to lower its debt and focus on its core businesses of jet engines, power plants and renewable energy.
The Baker Hughes transaction comes a day after GE Chief Executive Officer Larry Culp said the company would sell assets with “urgency” to reduce its high debt.
“Earlier this year we announced our intent to pursue an orderly separation from Baker Hughes,” Culp said in a statement. “The agreements announced today accelerate that plan in a manner that mutually benefits both companies and their shareholders.”
GE said in June it would sell its stake in Baker Hughes over the next two to three years.
The stake sale comes at a time when Baker Hughes is starting to see the benefits of an improving oil market, which helped it post a third-quarter adjusted profit in October.
The company had also said it was optimistic about the near future. Oil prices hit highs of about $85 a barrel earlier this year and production in North America has risen to record levels.
As part of the deal, Baker Hughes will buy back another part of GE’s stake. GE, which currently owns 62.2 percent of the company, will have the option to sell more Baker Hughes shares after the expiration of a 180-day lock-up period.
The transactions are expected to maintain GE’s stake in Baker Hughes above 50 percent, the companies said in a statement.
Reporting by John Benny in Bengaluru; Editing by Saumyadeb Chakrabarty and Sai Sachin Ravikumar
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