HOUSTON, Oct. 31 (UPI) -- Oilfield services company Baker Hughes said Monday it ends October as a new company after joining forces with the oil and gas division of General Electric.
Word of the deal between the two companies surfaced last week, though GE Oil & Gas said it was not necessarily in merger talks with Baker Hughes. With both sides agreeing unanimously on the arrangement, GE Oil & Gas takes a 62.5 percent stake in Baker Hughes for an entity with combined revenue of $32 billion.
"With employees of Baker Hughes and GE Oil & Gas coming together, the new company will be an industry leader, well-positioned to compete in the oil and gas industry while pushing the boundaries of innovation for our customers," Baker Hughes Chairman and CEO Martin Craighead said in a statement.
With both sides looking for signs of recovery in a market where some companies are reluctant to spend on the type of services Baker Hughes supplies, the combination gives both sides a win. For Baker Hughes, it's touting itself as a "new" company, while GE avoids the costs of a full acquisition.
"Combination is an exceptional cultural fit," the companies said in a joint statement.
Baker Hughes is one of the largest companies providing services to the exploration and production side of the energy sector. This quarter, it took a $429 million net loss. That follows steep reductions in staffing, but marks an improvement over the $911 million loss during the previous quarter.
GE's oil and gas business, meanwhile, has built up its position through acquisitions so that it's now one of the stronger divisions within the parent company. Sales for the GE oil and gas unit, however, were down about 25 percent for the third quarter.
Baker Hughes and Halliburton unveiled plans to join forces in late 2014 as lower crude oil prices started to spill over into the economics of the upstream, or exploration and production, side of the energy sector, though the U.S. Justice Department stopped the deal because of competitive overlaps.
GE Oil & Gas boss Lorenzo Simonelli will serve as the chief executive of the new company, while Craighead serves as vice chairman. Five board directors will be appointed by GE, and four will come from Baker Hughes.
"This transformative transaction will create a powerful force in the oil and gas market as we continue to drive long-term value for our customers and shareholders," Simonelli said.