Baker Hughes, GE Strike An Accord With DoJ To Close Merger

Baker Hughes Incorporated (NYSE:BHI) and General Electric Company (NYSE:GE) announced that they have struck an accord with the Department of Justice that would facilitate the parties to complete their proposed transaction under U.S. law.

This agreement marks a significant milestone for the companies with respect to forming an oil and gas productivity leader positioned to provide value for customers, employees and shareholders.

Subsequent to a proposed consent decree filed in District Court in Washington, D.C., General Electric has agreed that it will sell its GE Water & Process Technologies business (“GE Water”) after concluding the Baker Hughes transaction. In March, the company announced that it had agreed to divest GE Water to Suez for $3.4 billion. No other preparations are necessary after the proposed consent decree.

The companies had received clearance from the European Commission to complete the merger without conditions two weeks back. Consequently, Baker Hughes had scheduled its shareholders vote for Jun 30.

In Oct 2016, the companies signed an agreement to form the world’s second largest oil field service player. Per the deal, the oil and gas business of General Electric will merge with Baker Hughes to create a new entity – "New" Baker Hughes – which will rake in combined revenues of $32 billion. The new entity is expected to diversify its operations in more than 120 countries.

Following the conclusion of the deal, which is expected by the middle of this year, shareholders of Baker Hughes will own 37.5% of the new firm and also a one-time cash dividend of $17.50 per share.

Shares of Baker Hughes have lost 0.6% in the last three months, while the Oil & Gas – Field Services industry registered a decrease of 12.4%.

Baker Hughes currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include SunCoke Energy, Inc. (NYSE:SXC) and Enbridge Energy, L.P. (NYSE:EEP) . Both these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SunCoke Energy delivered a positive earnings surprise of 120.0% in the preceding quarter. The company beat estimates in two of the four trailing quarters with an average negative earnings surprise of 35.78%.

Enbridge Energy delivered a positive earnings surprise of 128.57% in the preceding quarter. The company beat estimates in three of the four trailing quarters with an average positive earnings surprise of 38.22%.

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