Market Overview

GE Will No Longer Be Baker Hughes Majority Owner

GE Will No Longer Be Baker Hughes Majority Owner

General Electric Company (NYSE: GE) said Tuesday afternoon it will cease a majority interest in Baker Hughes A GE Co (NYSE: BHGE).

What Happened

GE's ownership stake of Baker Hughes stands at around 522 million shares, or 50.4% of the company. GE will sell up to 120.75 million Baker Hughes shares in a secondary offer and Baker Hughes will buy $250 million worth of shares from GE in a separate transaction, according to Reuters.

GE's announcement is consistent with the company's prior remarks it wants to lower its stake in Baker Hughes. The transaction should net GE a cash inflow of around $3 billion but simultaneously result in an accounting charge of more than $7 billion, The Wall Street Journal reported. The accounting charge is attributed to the lower market value of GE's stake of Baker Hughes compared with how the company was carrying it.

Why It's Important

GE CEO Larry Culp continues to look for ways to raise capital to help lower its $100 billion debt load. Prior asset sales include the sale of its airplane finance business of GE Capital while a deal to sell its biotech business to Danaher remains ongoing.

Gordon Haskett analyst John Inch told Benzinga the deal may suggest GE very much needs a cash boost or the cash flow outlook may not be as upbeat as the company previously hoped for.

Once completed, GE will no longer hold a voting majority in Baker Hughes and will reduce the number of directors it can designate to Baker Hughes board from five to just one. GE already indicated it wants its gas power head John Riceto to remain its sole representative on Baker Hughes board.

Baker Hughes traded down about 2.5% Wednesday morning.

Related Links:

Citi: General Electric's Recovery 'Could Be More Significant' Than Investors Realize

Morgan Stanley: GE's Core Strengths Offset By 'Opaque Potential Cash Needs'

Latest Ratings for BHGE

Oct 2019CitigroupMaintainsBuy
Oct 2019Morgan StanleyMaintainsOverweight
Sep 2019Wells FargoMaintainsOutperform

View More Analyst Ratings for BHGE
View the Latest Analyst Ratings


Related Articles (GE + BHGE)

View Comments and Join the Discussion!

Posted-In: Gordon Haskett IndustrialAnalyst Color News Legal Top Stories Analyst Ratings Media Best of Benzinga

Latest Ratings

INTCJP MorganMaintains70.0
STMCanaccord GenuityMaintains47.0
ELDeutsche BankMaintains248.0
UAADeutsche BankMaintains13.0
INTCDeutsche BankMaintains55.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at