Baker Hughes, a GE company and General Electric Company Announce a Series of Long-Term Agreements to Maximize Value for Both BHGE and GE
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- Long-term collaboration on critical rotating equipment, including aeroderivative and heavy-duty gas turbine technology.
- BHGE access to GE Digital software and technology.
- A series of agreements relating to operations and pricing within BHGE Digital Solutions’ Controls product line, pensions, tax matters and intercompany services costs.
GE Chairman and CEO
The BHGE Conflicts Committee, a subcommittee of the BHGE Board of Directors consisting solely of non-GE designated independent directors, approved the Agreements following the negotiations with GE. GE’s Board of Directors also has approved the Agreements.
BHGE and GE also agreed on a release from the lock-up restrictions under
their stockholders agreement that previously prevented GE from disposing
of shares of BHGE common stock until
BHGE and GE agreed to cooperate on a proposed sale by GE of part of its stake into the market and to a concurrent repurchase of another part of GE’s stake by BHGE. Together, these transactions are expected to maintain GE’s stake in BHGE above 50%. GE’s remaining stake will be subject to a 180-day lock-up prohibiting further sales into the market without consent from the underwriting banks.
Secured long-term collaboration on critical rotating equipment
Under the terms of the Agreements, BHGE has defined the parameters for long-term collaboration and partnership with GE on critical rotating equipment technology.
BHGE and GE have agreed to form a Joint Venture (“JV”) to provide aeroderivative engine services and product management for use in the oil and gas and industrial spaces. The jet engine technology is mainly used in BHGE’s LNG, on-and-offshore production, pipeline and industrial segments within its Turbomachinery & Process Solutions (“TPS”) segment, and by GE in its power generation business.
Through the new JV, BHGE will continue to benefit from world-class jet engine technology. BHGE and GE will contribute certain assets and inventory into the JV and both companies will jointly control operations. The JV will have a supply and strategic collaboration agreement with GE Aviation with revised and extended pricing arrangements.
In parallel, BHGE has also entered into long-term supply and
distribution agreements with GE for heavy-duty gas turbine technology at
the current pricing levels. The agreements will become effective at the
later of (i)
The aeroderivative and heavy-duty gas turbine technologies are important components of BHGE’s TPS offerings and the long-term agreements provide clarity on the commercial approach and customer fulfilment.
Preserved access to GE Digital software & technology
As part of the Agreements, BHGE and GE Digital have agreed to extend their exclusive supplier relationship for digital oil and gas applications.
Other key agreements
- BHGE and GE agreed to maintain current operations and pricing levels with regards to the Controls product line BHGE offers within its Digital Solutions segment for the four years commencing on the Trigger Date.
GE will transfer to BHGE certain
UKpension liabilities on what is intended to be a fully funded basis. No liabilities associated with GE’s primary U.S. pension plan will be transferred to BHGE.
The current Tax Matters Agreement with GE that was negotiated at the
time of the merger between
Baker Hughes Incorporatedand GE Oil & Gas (the “Merger”) in July 2017will remain largely in place and both companies retain the ability to monetize certain tax benefits.
The intercompany services fee that BHGE agreed to pay to GE as part of
the Merger will be reduced over time beginning on
January 1, 2019.
- BHGE and GE agreed to amend the terms of their stockholders agreement to provide that (i) GE’s right to nominate five directors to BHGE’s nine-person board will continue until the Trigger Date, and (ii) GE will have a right to nominate one director to the BHGE board following the Trigger Date until GE ceases to own at least 20% of the voting power of BHGE’s outstanding common stock.
About Baker Hughes, a GE company
BHGE is the world’s first and only fullstream provider of integrated oilfield products, services and digital solutions. We deploy minds and machines to enhance customer productivity, safety and environmental stewardship, while minimizing costs and risks at every step of the energy value chain. With operations in over 120 countries, we infuse over a century of experience with the spirit of a startup – inventing smarter ways to bring energy to the world.
GE drives the world forward by tackling its biggest challenges. By combining world-class engineering with software and analytics, GE helps the world work more efficiently, reliably, and safely. For more than 125 years, GE has invented the future of industry, and today it leads new paradigms in additive manufacturing, materials science, and data analytics. GE people are global, diverse, and dedicated, operating with the highest integrity and passion to fulfill GE’s mission and deliver for our customers.
Cautionary Statement About Forward-Looking Statements
This news release contains “forward-looking statements” as that term is defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act. All statements, other than historical facts, including statements regarding the presentation of our operations in future reports and any assumptions underlying any of the foregoing, are forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “project,” “predict,” “continue,” “target” or other similar words or expressions. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved.
Important factors that could cause actual results to differ materially
from such plans, estimates or expectations include, among others, the
risk factors identified in the “Risk Factors” section of the BHGE and GE
Annual Reports on Form 10-K for the year ended
Source: Baker Hughes, a GE company
Baker Hughes, a GE company
Philipp Mueller, +1 281-809-9088
Melanie Kania, +1 713-439-8303
Todd Ernst, +1 617-443-3400
Jennifer Erickson, +1 646-682-5620