Cactus, a manufacturer of pressure control equipment for the oil and gas industry, has agreed to acquire a 65% stake in Baker Hughes’ surface pressure control (SPC) business in a deal valued at $344.5m
The deal will give Cactus operational control of the Baker Hughes’ unit, which specialises in designing and servicing surface pressure control solutions such as wellheads and production tree equipment for international markets.
This acquisition leads to the creation of a joint venture where Baker Hughes retains a 35% interest while contributing its surface pressure control product line.
Cactus aims to infuse the joint venture with $70m in operating cash at closing, with Baker Hughes contributing 35% of that amount, which is set to be reimbursed over time.
In addition, Cactus has reserved the right to purchase the remaining 35% stake from Baker Hughes any time after the second anniversary of the closing. The funding for this acquisition will be sourced from Cactus’ cash reserves and an undrawn $225m revolving credit facility, with potential debt financing considered to maintain liquidity.
The independent operation of this new joint venture will focus on strengthening its position in international markets for surface wellhead and production tree systems.
This move is in line with Baker Hughes’ strategy to refine its portfolio, aiming for enhanced earnings durability and cash flow. It allows Baker Hughes to redirect capital towards more lucrative opportunities while maintaining a disciplined capital deployment approach.
Baker Hughes chairman and CEO Lorenzo Simonelli said: “This transaction marks an important step in our ongoing portfolio optimization strategy, enabling us to sharpen our focus on core growth areas while continuing to drive higher returns, reinforcing our commitment to long-term value for our shareholders.
“We remain committed to our valued SPC partners and customers whose operations we have proudly supported, and we believe this joint venture only enhances delivery of innovation and reliability in well control as the combined business will leverage Cactus’ unconventional expertise and agility into international markets.”
For Cactus, this acquisition is said to enhance its status as a major oilfield equipment manufacturer that is both capital-efficient and geographically diverse.
Approximately 85% of surface pressure control unit’s revenue is derived from the Middle East, offering Cactus a more stable revenue profile across market cycles with limited exposure to US external sales.
Cactus chairman and CEO Scott Bender said: “The SPC business meets all of our acquisition criteria. Its geographic footprint is highly complementary to Cactus’ existing business, and this combination enables us to expand our reach as a capital-light manufacturer of highly-engineered products sold directly to end users.
“Additionally, our leadership team’s familiarity with the business, which operates former Wood Group Pressure Control assets that members of our team previously managed, provides increased confidence in operating the business efficiently.”
The completion of this transaction is contingent on customary conditions and regulatory approvals, with an anticipated closing in the latter half of 2025.
