General Electric affirms commitment to Baker Hughes
HOUSTON, (Reuters) - Shares of General Electric Co's Baker Hughes rose sharply on Wednesday after the parent company said it no longer planned to shed its holdings in the oilfield services business before the expiration of a two-year lockup period, reversing an earlier stance that had cast uncertainty around the stock.
The General Electric logo is pictured on the General Electric offshore wind turbine plant in Montoir-de-Bretagne, near Saint-Nazaire, western France. (REUTERS/Stephane Mahe/File Photo) |
General Electric last November said it was considering shedding its Baker Hughes holdings to refocus its business and boost cash flows. The announcement came just months after the conglomerate had purchased a 63 percent stake in the firm under a deal that combined its oil and gas services and equipment business with Baker Hughes to create the second largest oilfield services firm by revenue.
A recent move in oil prices to above $60 a barrel and the relative low valuation of Baker Hughes stock had some investors questioning whether General Electric would spin off the company before a two-year lockup period the companies set as part of the merger agreement.
"Given today's valuation levels, we see a lot of upside there. We like the macro trends. At this point in time, we have no intent to change anything or execute prior to the expiration of any of the lockup periods," said Jamie Miller, GE's finance chief, at a Barclay's conference in Miami.
Baker Hughes shares rose as much as 9 percent from the day's low and was trading around $27.24 at midday, up about 3 percent.
Under the merger agreement, General Electric cannot spin off its investment without special approval from a committee of board members.
Despite complementary offerings and the recent spike in oil prices, shares of GE's Baker Hughes have fallen by more than 30 percent since the close of the merger. Disappointing fourth quarter results and lowered guidance prompted analyst to lower profit targets for the year.
"The uncertainty had been pressuring the shares," said James West, senior managing director and partner at investment bank Evercore ISI.
A representative from Baker Hughes did not immediately respond to a request for comment. (Reporting by Liz Hampton, editing by G Crosse and Marguerita Choy)
- Gasum powers Equinor's platform supply vessel with bio-LNG
- ADNOC deploys pioneering AI-enabled process optimization technology
- Mexico Pacific announces long-term LNG SPA with POSCO International
- ONEOK to acquire Medallion and controlling interest in EnLink for $5.9 B
- Golar LNG signs EPC deal for $2.2-B MK II FLNG conversion project
- ONEOK to acquire Medallion and controlling interest in EnLink for $5.9 B
- Picarro launches handheld solution for natural gas leak investigation and closed-loop leak management
- Fincantieri LNG-powered Star Princess launched in Monfalcone
- Oman plans third LNG train, boosting domestic production to more than 15 MMtpy
- Brazil's fossil push undermines Lula's green ambitions
Comments