© Reuters. A screen displays the logo for Baker Hughes on the floor at the NYSE in New York

(Reuters) – General Electric (N:) is looking to raise up to $3 billion in sale of majority-owned Baker Hughes (N:) shares, resulting in a reduction of the U.S industrial conglomerate’s stake in the oilfield services provider to less than 50%, Baker Hughes said on Tuesday.

Shares of Baker Hughes, in which GE owned an about 50.4% stake as of June 30, fell 3.7% to $23.20 in after hours trading, while GE’s were marginally up at $9.15.

GE had long planned to sell down its stake in Baker Hughes.

But the issue came under scrutiny last month when Madoff whistleblower Harry Markopolos issued a lengthy report that alleged in part that GE was improperly counting Baker Hughes’ income, capital and cash in GE’s financial statements.

GE has said its accounting was appropriate since it is the majority shareholder.

Baker Hughes said GE would sell up to 120.75 million shares, including over-allotment option, of Baker Hughes’ Class A common in a secondary offering. Baker Hughes will additionally repurchase $250 million of Class B common stock from GE in a private transaction.

GE currently owns about 522 million shares of Baker Hughes, and has said previously that a reduction in its ownership interest below 50% in Baker Hughes will result in GE ‘deconsolidating’ its oil and gas business.

GE’s cash generation has failed to keep pace with earnings in recent years, causing the company to cut its dividend and divest non-core assets in order to raise billions of dollars in cash to meet its financial obligations.

Baker Hughes said the deal would also shrink the industrial conglomerate’s presence on the oilfield services company’s board to one seat from five.

General Electric wants John Rice to be its designated member on the Baker Hughes board, while Lorenzo Simonelli and Geoffrey Beattie are expected to continue as directors, but not as GE representatives.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link

2019-09-10