General Electric (GE) has secured US antitrust approval to merge its oil and gas business with Baker Hughes to create a $32bn company with operations in over 120 countries.
To clear the merger proposal, the US Department of Justice has laid a condition that required GE and Baker Hughes divest GE’s Water & Process Technologies (GE Water) business.
GE said in a statement that it has agreed to sell GE Water after closing the Baker Hughes transaction.
According to the Justice Department, the proposed merger, without the divestiture, would result in significant lessening of competition for refinery chemicals and services in the US, leading to higher prices and a reduction in service quality.
In its complaint, the Department said that the transaction would lead to a reduction in the number of competitive alternatives in the refinery chemicals and services space, resulting in higher prices and drop in service quality.
The Department said: “The merger would unite two of the four companies that provide the sophisticated chemicals and services required to refine crude oil and natural gas.”
In March, GE announced the sale of its GE Water to Suez for $3.4bn.
Recently, the European Commission has approved GE’s purchase of oilfield services company Baker Hughes without any conditions.
The Commission said that the merger will not have any adverse affect on competition in relevant markets, after completing an investigation into the deal.
GE and Baker Hughes are actively engaged in providing oilfield services to oil and gas exploration and production firms in the European Economic Area (EEA) and rest of the world.
The combined company is expected generate substantial synergies through combined efficiency and growth. The companies expect to generate total runrate synergies of $1.6bn by 2020.
Image: Baker Hughes’ eco-centre facility. Photo: courtesy of Baker Hughes Incorporated.