BHGE - GE Is Giving Up Its Majority Stake in Baker Hughes
Last fall, General Electric (NYSE: GE) sold nearly a quarter of its shares in Baker Hughes, a GE Company (NYSE: BHGE) to shore up its balance sheet. The share sale -- split between a secondary offering to outside investors and a buyback by Baker Hughes -- reduced GE's stake in its energy services spinoff from 62.5% to just above 50%.
Earlier this week, Baker Hughes, A GE Company announced that General Electric is executing another secondary offering (alongside a smaller share repurchase by Baker Hughes), which will reduce GE's stake to well below 50%. This will trigger a big accounting charge and will cause GE to stop consolidating Baker Hughes' results in its own financial statements. However, it will contribute to a big reduction in General Electric's debt load over the next few quarters.
General Electric has agreed to sell 115 million shares of Baker Hughes, a GE Company stock at $21.50 per share in a secondary offering. The deal underwriters have an option to buy another 17.25 million shares within 30 days. Separately, Baker Hughes will spend $250 million to repurchase nearly 12 million shares from GE at the same price.