General Electric recently announced that it would merge its oil and gas business with Baker Hughes to create the world’s second largest oilfield services company, according to reports.
The merger is expected to result in a services provider making $32 billion in annual revenues. It will combine GE’s core competence in manufacturing equipment that is most preferred by oil producers and Baker Hughes’ strength in drilling and fracking.
"This is a good deal for all of the investors," Lorenzo Simonelli, head of GE's oil and gas business told reporters. He will assume leadership of the new entity, which will be named "Baker Hughes, a GE company."
GE is the world’s largest oilfield equipment maker and has invested huge sums into big data processing services, as demand for it emerges in the oil industry for its potential to pump up oil recovery.
Baker Hughes brings to the table its horizontal drilling expertise and the provision of chemicals used for fracking and other services used in oil production.
Under the agreement, GE will own 62.5% of the new publicly listed company. The two companies expect to finalize the deal by mid-2017.
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