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Baker Hughes To Merge With GE Oil & Gas. What Could That Mean For Their Real Estate?

Houston Energy

This Halloween, Houston is abuzz with news of the blockbuster merger between Baker Hughes and GE Oil & Gas. The $32B deal will combine the nation's largest industrial titan with the third-largest energy services company. The deal comes just months after an acquisition by Halliburton was blocked by the Justice Department over competitive concerns. 

Boston-based GE will own 62.5% of the “new” Baker Hughes while current Baker Hughes investors will get a one-time cash dividend of $17.50/share, partially funded by a $7.4B cash contribution by GE. Baker Hughes will hold onto 37.5% of the blended company. Both corporate boards unanimously signed off on the deal.

NGKF director of research David Wegman broke down what the mega-merger may mean for Houston. He says companies seek cost-cutting strategies following M&A transactions. The overall impact depends on myriad factors, such as whether the real estate is owned or leased, the number of locations, employee concentration and location of the new corporate headquarters. The Baker Hughes and GE Oil & Gas merger should have fairly minimal impact on Houston’s office market, David says, considering Baker Hughes' long-term presence and commitment to Houston.