The company will combine the digital solutions, manufacturing expertise and technology from the GE Store and Baker Hughes’s expertise in the oilfield services sector.

The transaction is expected to close in mid 2017. 

GE chairman and chief executive officer Jeff Immelt said:  “This transaction creates an industry leader, one that is ideally positioned to grow in any market. Oil & gas customers demand more productive solutions.

“This can only be achieved through technical innovation and service execution, the hallmarks of GE and Baker Hughes.”

GE will own 62.5% stake in the new company, while Baker Hughes will hold the remaining stake.

The new firm will have dual headquarters in Houston, Texas and London, UK. 

Baker Hughes chairman and chief executive officer Martin Craighead said: “This compelling combination brings together best-in-class oilfield equipment manufacturing and services, and digital technology offerings for the benefit of all customers and stakeholders.

“The combination of our complementary assets will create a platform capable of seamless integration while we enhance our ability to deliver optimized and integrated solutions and increase touch points with our customers.”

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.

The transaction is subject to approval by Baker Hughes shareholders, regulatory approvals, and other customary closing conditions.

GE Oil & Gas president and CEO Lorenzo Simonelli said: “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.”

Image: GE to combine oil and gas business with Baker Hughes . Photo: Courtesy of General Electric.