Baker Hughes and General Electric (GE) have reached an agreement with the U.S. Department of Justice that would allow them to complete their proposed transaction under the U.S. law. In addition, the Australian authorities said they would not oppose the merger.
The companies will establish a new listed company combining the oil and gas business of GE and the whole business of Baker Hughes. The global merger between GE and Baker Hughes is valued at approximately $32 billion.
“Today’s milestone represents significant progress toward creating an oil and gas productivity leader positioned to deliver value for customers, employees and shareholders,” the pair said in a joint statement on the U.S. deal on Monday.
Pursuant to a proposed consent decree filed on Monday in District Court in Washington, D.C., GE has agreed that it will divest its GE Water & Process Technologies business (GE Water) after closing the Baker Hughes transaction.
GE announced in March that it had agreed to sell GE Water to Suez for $3.4 billion. No other remedies are required by Monday’s proposed consent decree, the statement said.
Australia says OK
In a separate statement on Tuesday, the Australian Competition and Consumer Commission said it wouldn’t oppose the proposed acquisition of Baker Hughes by GE.
The ACCC says the merger remedy obtained by the US Department of Justice requiring GE to sell its GE Water business to Suez brings certainty that the sale will occur, removing potential competition concerns in Australia.
In Australia, GE (through GE Water) and Baker Hughes are key suppliers of downstream chemicals, particularly refinery process chemicals. Downstream chemicals are primarily used by the petrochemical and refinery industry to treat water and wastewater to make it suitable for use or disposal.
The ACCC began an investigation into the effect the global merger would have on the Australian market in February 2017.
“Over the course of this merger investigation, we spoke to major customers of both companies, including oil refineries and energy companies,” ACCC Chairman Rod Sims said.
“While the acquisition would increase concentration in some segments of downstream chemicals, we accept the global sale of GE Water to Suez will remove the overlap and resolve those potential concerns.”
The ACCC also determined the proposed acquisition was unlikely to raise competition concerns in the supply of inline inspection and integrity services.
The companies also recently received clearance from the European Commission to complete the transaction, announced in October 2016, without conditions. Baker Hughes scheduled its shareholders vote for June 30 and the pair continues to target a mid-year close.
In related news, GE on Monday named a new chairman and CEO as its current boss is retiring.
Offshore Energy Today Staff