Just months after GE and Baker Hughes completed their high-profile merger in July this year, GE's new CEO John Flannery has told investors on 13 November that the company is looking at its exit options regarding the newly combined business, BHGE.
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| John Flannery. Photo from GE. |
Flannery is tasked with slimming down GE's portfolio of businesses, and BHGE could be problematic as it is tied to oil's ups and downs.
"The problem and challenge that we have in this business is the cyclicality and the commodity nature of the business," Flannery said on the 13 November investor update conference call. "So, it tends to overwhelm a lot of the management actions and you’ve seen that in this business going forward. So, a strong business, a lot of commodity in risk and exposure."
GE owns 62.5% of BHGE, and according to the merger terms, GE will stay put until July 2019.
Despite the news, Flannery had positive things to say about the integration between GE Oil & Gas and Baker Hughes.
"The merger is going well, [CEO Lorenzo Simonelli] and team doing quite well good meshing of the GE and Baker Hughes teams," he said on the 13 November call. "[We're] fully committed to getting the synergies that we outlined there, those are on track and [we're] fully committed to getting the value creation of mixing things like GE Digital capabilities with Baker Hughes service capabilities. So, we like the team, we like the business, and we expect good growth in this business over the next two years or three years in terms of topline and earnings."
GE wasn't Baker Hughes first takeover partner. A proposed merger between Halliburton and Baker Hughes fell apart in May 2016, and GE swooped in late that same year.
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