Executed Through Public Offering of BHGE Shares and Concurrent Private Sale to BHGE of Ownership Interests in BHGE; Building on Several Steps GE Has Taken To Strengthen Its Balance Sheet
BOSTON–(BUSINESS WIRE)–GE (NYSE: GE) announced today the reduction of its ownership in Baker Hughes, a GE company (“BHGE”) through a public offering (the “offering”) of 115 million shares of Class A common stock, par value $0.0001 per share (the “Class A common stock”), of BHGE and a concurrent private sale to BHGE of ownership interests in BHGE.
The offering upsized and priced today at a price to the public of $21.50 per share. The underwriters have a 30-day option to purchase up to an additional 17.25 million shares of Class A common stock from GE or one or more of its affiliates. The offering is expected to close on September 16, 2019, subject to customary closing conditions.
In addition, GE is selling to BHGE, in a privately negotiated transaction, $250 million of shares of BHGE Class B common stock, par value $0.0001 per share, together with an equal number of associated membership interests of Baker Hughes, a GE company, LLC (the “repurchase”), at a price equal to the price per share at which the underwriters will purchase shares of Class A common stock from GE in the offering. The repurchase is expected to be completed immediately following the offering on September 16, 2019. Although the repurchase is conditioned upon the closing of the offering, the closing of the offering is not conditioned upon the closing of the repurchase.
Combined net proceeds of the offering and the repurchase will be approximately $2.7 billion, or approximately $3.0 billion assuming full exercise of the underwriters’ option to purchase additional shares in the offering.
GE Chairman and CEO H. Lawrence Culp, Jr., said, “Reducing GE’s ownership in BHGE continues our efforts to improve our financial position by generating approximately $2.7 billion in net proceeds to GE. This offering builds on several recent deleveraging steps we have taken, and we will continue to take action in 2019 and 2020 to achieve our leverage targets.”
Upon completion of the transactions, GE and its affiliates will hold approximately 38.4% of BHGE’s outstanding voting stock. GE will no longer have a controlling interest in BHGE and expects to continue to divest the remainder of its BHGE holdings in an orderly fashion over time.
As GE has previously disclosed, upon the reduction of GE’s holdings to less than 50% of the voting power of BHGE’s outstanding voting stock, GE will deconsolidate BHGE, reclassify BHGE’s historical operations as a discontinued operation, and account for the remaining investment in BHGE at fair value by marking to market our remaining investment as of the last day of each reporting period.
As GE has also previously disclosed, GE expects to recognize a significant loss in earnings as a result of ceding control of BHGE, which it will reflect in its third-quarter 2019 results. GE will determine the final amount of this non-cash charge, as well as the impact of deconsolidating BHGE on its 2019 outlook framework, based on information available as of the end of the third quarter, and will disclose this information when it reports third-quarter 2019 results on October 30, 2019.
The final amount of this charge will depend on several factors, the most significant of which is BHGE’s stock price as of the time the offering closes. It will also be impacted by realized proceeds for the offering and changes in carrying value of BHGE since June 30, 2019 through the time the offering closes.
In July 2019, GE estimated the loss upon deconsolidation of BHGE would be approximately $7.4 billion, based upon BHGE’s share price of $24.84 as of July 26, 2019. A change in the BHGE share price of $1, as of the relevant determination date, would increase or decrease the estimated loss by approximately $500 million, based on GE’s ownership of approximately 500 million BHGE shares immediately prior to closing of the offering, before being impacted by the amount of realized proceeds from the offering and changes in carrying value of BHGE.
Upon close of the transaction, GE will also reduce the number of its representatives on BHGE’s Board of Directors from five to one. John G. Rice is expected to remain on BHGE’s board of directors as GE’s representative.
Caution Concerning Forward Looking Statements:
This document contains “forward-looking statements” – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “estimate,” “forecast,” “target,” “preliminary,” or “range.”
Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, the risk factors that are described in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019 and June 30, 2019 and the risk factors that are described in “Forward-Looking Statements” in BHGE’s most recent earnings release or SEC filings. These documents are available through our website or through the SEC’s Electronic Data Gathering and Analysis Retrieval system at http://www.sec.gov.
These or other uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
GE (NYSE: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. www.ge.com
GE’s Investor Relations website at www.ge.com/investor and our corporate blog at www.ge.com/reports and @GE_Reports on Twitter, as well as GE’s Facebook page and Twitter accounts, contain a significant amount of information about GE, including financial and other information for investors. GE encourages investors to visit these websites from time to time, as information is updated and new information is posted.
Steve Winoker, 617.443.3400
Mary Kate Mullaney, 202.304.6514
Subscribe to PICANTE via Email
Follow us on Facebook
Subaru Chooses TomTom Navigation for All-New US Vehicles
Continuity Wraps Up a Strong 2019 with a Strategic Acquisition, the Launch of a New Product and Multiple New Client Signings
ZetaDisplay adapts its organization to increase scalability and growth
GridGain’s Strong Market Momentum Continued in 2019
Microchip Joins Responsible Business Alliance (RBA) – the Global Industry Coalition Dedicated to Corporate Social Responsibility
CDK Global to Announce Second Quarter Fiscal 2020 Financial Results on February 4, 2020
Phenom People Raises $30 Million in Series C Proving the HR Shift Towards AI-Powered Talent Experiences
NETSOL Technologies to Ring Nasdaq Closing Bell on Tuesday, January 21, 2020
Vouch uses Socotra’s cloud-based platform to launch insurance products tailored for high-growth startups
Timeout called on online negativity as mobile users are invited to #TextForHumanity
Design Intelligence Award 2020 Is Looking for the Most Outstanding Design
Rovio Entertainment Corporation: Repurchase of own shares on 8 January 2020
CORRECTING and REPLACING Robins Kaplan Announces Bremer Bank Employee-Shareholders File Class-Action Lawsuit Against Three Trustees of Otto Bremer Trust
Shareholder Alert: Robbins LLP Announces Mohawk Industries, Inc. (MHK) Sued for Misleading Shareholders
Join TOPs of gambling hangout: BET2020 proposes a unique offer!
Digital Securities Guru Thomas Carter on The Two Keys That Will Unlock Mass Adoption of Cryptocurrency/Blockchain in 2020
Rovio Entertainment Corporation: Repurchase of own shares on 9 January 2020
What Does Public Domain Day Mean for Book Readers?
Rovio Entertainment Corporation: Repurchase of own shares on 10 January 2020
ZEDRA to acquire BNP Paribas Singapore Trust Corporation Limited
Follow our Tweets
Cannabis2 days ago
7 Things to Consider Before Buying Safe CBD Products
Augmented Reality (AR)4 days ago
Fluper Featured as the Best Android App Development Company By Crowd. Review
IT6 days ago
Jumei Announces Receipt of a Preliminary Non-Binding Proposal to Acquire the Company at $20.0 per ADS
Business and Management5 days ago
The Law Offices of Frank R. Cruz Announces Investigation on Behalf of The RealReal, Inc. Investors (REAL)
Guest Articles3 days ago
Robo.cash doubles funding volumes in 2019
Guest Articles3 days ago
Which Type of Furniture you should have for Elegant Look of Your Bedroom
IT5 days ago
MoneyGram and EbixCash Sign Exclusive Strategic Agreement to Expand Presence in India
Business and Management5 days ago
Tommy Hilfiger Announces Tommy Hilfiger Fashion Frontier Challenge Social Entrepreneur Finalists