GE has announced the reduction of its ownership in Baker Hughes, a GE company (BHGE) through a public offering and that it would get US$2.7 billion in net proceeds from reduction of its ownership to 38.4 per cent.
The public offering of 115 million shares of Class A common stock, par value $0.0001 per share of BHGE and a concurrent private sale to BHGE of ownership interests in BHGE. The underwriters have a 30-day option to purchase up to an additional 17.25 million shares of Class A common stock from GE or one or more of its affiliates. The offering is expected to close on September 16, 2019, subject to customary closing conditions.
In addition, GE is selling to BHGE, in a privately negotiated transaction, $250 million of shares of BHGE Class B common stock, par value $0.0001 per share.
Combined net proceeds of the offering and the repurchase will be approximately $2.7 billion, or approximately $3 billion assuming full exercise of the underwriters’ option to purchase additional shares in the offering.
GE Chairman and CEO H. Lawrence Culp, Jr., said, “Reducing GE’s ownership in BHGE continues our efforts to improve our financial position by generating approximately $2.7 billion 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.”
Upon completion of the transactions, GE and its affiliates will hold approximately 38.4% of BHGE’s outstanding voting stock. GE will no longer have a controlling interest in BHGE and expects to continue to divest the remainder of its BHGE holdings in an orderly fashion over time.
Upon close of the transaction, GE will also reduce the number of its representatives on BHGE’s Board of Directors from five to one. John G. Rice is expected to remain on BHGE’s board of directors as GE’s representative.