GE to exit Baker Hughes business
Seeking to focus on its aviation, power and renewable energy businesses, GE has announced it plans to fully separate its 62.5% interest in Baker Hughes GE (BHGE) in an orderly manner over the next two to three years.
The company also plans to separate GE Healthcare into a standalone company and to make its corporate structure leaner and substantially reduce debt, GE reported in a 26 June press release.
“GE Healthcare and BHGE are excellent examples of GE at its best — anticipating customer needs, breaking barriers through innovation and delivering life-changing products and services,” said GE Chairman and CEO John Flannery. “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 these businesses resulted from a strategic review of its assets. The company said it intends to become a focused high-tech industrial company that will be easier for investors to follow and measure with a significantly improved balance sheet to support its remaining businesses.
The company is targeting an industrial net debt-to-EBITDA (earnings before interest, tax, depreciation and amortization) ratio of less than 2.5 times and a long-term A credit rating. GE also plans to reduce industrial net debt by approximately $25 billion by 2020 and maintain more than $15 billion of cash on the balance sheet. It also aims to create a leaner corporate structure with more than $500 million in savings.
The combination of Baker Hughes with GE’s oil and gas business was completed in July 2017. The goal of the new company was to offer equipment, services and digital solutions across the spectrum of oil and gas development.
