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BHGE and GE announce series of long-term agreements

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LNG Industry,

Baker Hughes, a GE company (BHGE) and General Electric Company (GE) have announced that they have entered into a series of long-term agreements that amend the commercial and technological relationships between the two companies.

According to the statement, the agreements focus on the following:

  • 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 service costs.

Lorenzo Simonelli, BHGE’s Chairman, President and Chief Executive Officer, said: “We are very pleased with the agreements we have reached with our partners at GE. They provide clarity for our customers, employees and shareholders. Our ability to execute and provide a differentiated investment opportunity is unchanged. Importantly, there will be no material impact to our outlook, strong balance sheet, or ability to generate cash. We remain well positioned to capitalise on the positive outlook for our industry and are focused on our top priorities of gaining share, improving margins and generating cash.”

GE Chairman and CEO, H. Lawrence Culp, Jr., added: “Earlier this year we announced our intent to pursue an orderly separation from BHGE. The agreements announced today accelerate that plan in a manner that mutually benefits both companies and their shareholders. We look forward to continuing our commercial relationship, which strengthens both GE’s and BHGE’s abilities to deliver high-value technologies and solutions to customers around the world.”

According to the statement, the BHGE Conflicts Committee, which is a subcommittee of the BHGE Board of Directors consisting solely of non-GE designated independent directors, approved the agreements following talks with GE. In addition to this, GE’s board of directors has also approved the agreements.

Both companies have reportedly agreed on a release from the lock-up restrictions under their stockholders agreement that previously stopped GE from disposing of shares in BHGE common stock until July 2019.

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. Combined, it is expected that these transactions will maintain GE’s stake in BHGE above 50%. GE’s remaining stake will be subject to a 180-day lock-up preventing further sales into the market without consent from the underwriting banks.

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