GE to Sell off Baker Hughes

US turbine-making and aerospace giant GE said June 26 its plans to fully offload its 62.5% interest in Baker Hughes, a GE Company, (BHGE) over the next two to three years. 

“The separation will provide BHGE with enhanced agility and the ability to focus on leading in the oil and gas industry,” GE said. The decision is the result of GE’s strategic review. The company said it will focus on aviation, power and renewable energy, creating a “simpler, stronger, leading high-tech Industrial company.” GE has also decided to spin off its healthcare business; GE expects to monetise 20% and distribute remaining 80% of GE Healthcare to shareholders tax-free.

Already at the start of 2018, GE signaled it was considering its own break-up, in order to cover a $15bn shortfall in reserves out to 2024.

John Flannery CEO of GE, said June 26: “Today’s actions unlock both a pure-play healthcare company and a tier-one oil and gas servicing and equipment player. We are confident that positioning GE Healthcare and BHGE outside of GE’s current structure is best not only for GE and its owners, but also for these businesses, which will strengthen their market-leading positions and enhance their ability to invest for the future, while carrying the spirit of GE forward.”

GE’s decision to exit BHGE comes less than a year after its acquisition of Baker Hughes was completed in July 2017; GE merged it with its own oil and gas equipment and services operations. Earlier this week GE was removed from the 30-stock Dow Jones industrial average and replaced by a pharmaceutical company, after GE's market capitalisation shrank by roughly 50% in the space of a year to below $120bn.