Under the deal announced Monday, General Electric will own 62.5 percent of the new publicly traded company and Baker Hughes, which provides drilling services for oil and gas companies, will own the rest. Baker Hughes shareholders will receive a one-time cash dividend of $17.50 per share.
The boards of both companies have approved the deal, which is expected to close mid-2017. It still needs approval from Baker Hughes shareholders. The transaction calls for GE to contribute $7.4 billion to Baker Hughes shareholders as a cash dividend.
The new business, will have dual headquarters in Houston and London, is valued at $14 billion, the companies said.
“Oil and gas customers demand more productive solutions. This can only be achieved through technical innovation and service execution, the hallmarks of GE and Baker Hughes,” said GE chief executive Jeff Immelt in a statement.
Lorenzo Simonelli, president and CEO of GE Oil & Gas, will become the new company’s CEO. Immelt will serve as chairman of the board.
Shares of Baker Hughes are up more than 6 percent before the opening bell, while GE’s stock is up slightly.