Back to top

Image: Bigstock

Baker Hughes, General Electric May Accelerate Parting Process

Read MoreHide Full Article

Baker Hughes, a GE company announced that 92 million of its class A common shares will be sold by General Electric Company (GE - Free Report) in a secondary offering. The leading oilfield service player added that additional 9.2 million class A stocks will be purchased by the underwriters if they execute their 30-day options.

In addition to this, Baker Hughes has decided to buy back 65 million of its class B common stocks from General Electric. Overall, the transaction that includes the divestment of 166.2 million Baker Hughes shares, through both stock buy-back program and secondary offering, will likely fetch General Electric nearly $4 billion in cash.  

It is to be noted that with the closure of the deal, the ownership stake of General Electric in Baker Hughes will drastically fall to just more than 50% from 62.5%. Importantly, General Electric will have to take prior permission from the underwriting banks if the company decides to divest its remaining stake in Baker Hughes in the coming 180 days. The developments show that General Electric is determined to separate from Baker Hughes earlier than expected.   

Many analysts agree that the attained fund from early separation will help General Electric lower its piled-up debt load — reported at $112.3 billion as of Sep 30. In fact, General Electric added that the plan for early exit will not only benefit its shareholders but Baker Hughes’ also. Although there might be an early separation of the companies, Baker Hughes will continue to have access to the digital technology of the industrial conglomerate.

Currently, Baker Hughes carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space are Hess Corporation (HES - Free Report) and Enterprise Products Partners L.P. (EPD - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

Hess beat the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 230.5%.

Enterprise Products surpassed the Zacks Consensus Estimate in the prior four quarters, the average positive earnings surprise being 9.3%.

3 Medical Stocks to Buy Now

The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.

So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.

See them today for free >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


General Electric Company (GE) - free report >>

Enterprise Products Partners L.P. (EPD) - free report >>

Hess Corporation (HES) - free report >>

Published in