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General Electric is in talks to merge with Baker Hughes

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General Electric Co. is in talks to merge its oil-and-gas business with Baker Hughes Inc., according to people familiar with the matter, a transaction that would dramatically reshape the industrial giant. GE has approached the oil-field-services company about a deal, the people said, but details of the talks couldn’t be learned and they could break down before an agreement is reached. A deal—which could be worth upward of $20 billion—could be structured such that GE combines the businesses and spins them into a new publicly traded company. Such a transaction would help the maker of jet engines and locomotives distance itself from the battered energy industry.

“We are in discussion with Baker Hughes on potential partnerships,” a GE spokeswoman said after The Wall Street Journal reported that GE was in talks to buy Baker Hughes. “While nothing is concluded, none of these options include an outright purchase,” she added. Baker Hughes declined to comment. Houston-based Baker Hughes, which had a market value of $23 billion at Thursday’s close, had revenue of $15.7 billion last year. GE, which had a market value of $259 billion, had $16.5 billion in revenue from its oil-and-gas business last year.

Baker Hughes shares closed Thursday at $54.55 and rose 7% after hours, after the Journal reported on the talks. In 2014, Baker Hughes agreed to sell itself to rival Halliburton Co. for $35 billion, or $78.62 a share. Earlier this year, the Justice Department filed a lawsuit to block the proposed merger, and the deal fell apart. Baker Hughes is one of the largest oil-field-services companies in the world by revenue. Such companies help energy producers, from Texas wildcatters to national oil companies, find and extract oil-and-gas deposits by selling them equipment, renting tools, supplying labor and building worker camps in far-flung drilling fields—all of which have helped power the U.S. drilling boom.

– WSJ

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