Houston-based Baker Hughes, a GE Company (NYSE: BHGE), might not be a GE company much longer — its parent, General Electric Co. (NYSE: GE), is selling off 105 million shares of its Class A common stock through underwriters.
Immediately after that offering closes, GE will sell Baker Hughes another $250 million in BHGE Class B common stock, according to a filing with the U.S. Securities and Exchange Commission Sept. 10.
The underwriters have the right to purchase an additional 15.75 million shares as part of the Class A offering, according to the SEC filing.
The end result is that GE will no longer hold a majority voting control over Baker Hughes, according to a press release published Sept. 10. That means, among other things, that GE will have to reduce the number of directors who represent the Boston-based company on the BHGE board from five to one, per the release.
GE intends to keep John Rice as its board designee, which means directors Jamie Miller and James Mulva will have to resign. Rice is GE’s vice chairman.
BHGE’s chairman, president and CEO, Lorenzo Simonelli, and company director Geoffrey Beattie are both meant to stay on the board, though they will no longer do so as GE designees, the company said.
These agreements aren’t a surprise. BHGE and GE have been moving toward a separation for more than a year now.
Since they announced the separation in June 2018, the duo have put agreements into place that define their relationship after they part ways.
BHGE was formed in summer 2017 through the merger of Houston-based Baker Hughes Inc. and London-based GE Oil & Gas. The combined company has dual headquarters in Houston and London, and it had 66,000 employees as of Dec. 31, the majority of whom are based outside of the U.S, according to the company’s 2018 annual report filed with the SEC.