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GE to pare down Baker Hughes stake below 50% in share sale

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GE to pare down Baker Hughes stake below 50% in share sale

General Electric Co. is set to lose majority control of Baker Hughes through a sale of millions of shares in the oilfield services company.

The industrial conglomerate and affiliates GE Oil & Gas US Holdings I Inc., GE Holdings (US) Inc. and GE Oil & Gas US Holdings IV Inc. launched a secondary offering of 105 million shares of Baker Hughes Class A common stock. Underwriters have a 30-day option to purchase an additional 15.75 million shares.

Baker Hughes is not offering any of its class A shares and will not receive any proceeds from the secondary offering, according to a Sept. 10 release.

Shares of Baker Hughes dropped nearly 4% in extended trading, while those of GE ticked down 0.1%.

In addition, Baker Hughes agreed to repurchase $250 million of its Class B shares, along with an equal number of associated membership interests in Baker Hughes a GE company LLC, from GE and its affiliates in a privately negotiated transaction. The purchase price for the Class B shares will be equal to the price per Class A share that the underwriters will pay in the secondary offering.

The repurchase will be funded using Baker Hughes' cash on hand and other available sources of liquidity and is conditioned on, among other things, the completion of the secondary offering.

After the offering is completed, GE and its affiliates will no longer own more than 50% of the voting power of all classes of Baker Hughes' voting stock. This, among other things, will decrease the number of individuals that GE is entitled to designate to Baker Hughes' board from five to one.

J.P. Morgan, Citigroup, Goldman Sachs & Co. LLC and Morgan Stanley are acting as joint lead book-running managers for the secondary offering while BofA Merrill Lynch, BNP Paribas and Evercore ISI are acting as joint book-running managers.