Baker Hughes is about to be sold off: GE is Bankrupt/FRAUD

[footeab@yahoo.com + 2,187]

Baker Hughes is about to be sold off: GE is Bankrupt/FRAUD.  SO: Who will buy it for ~$12B???

$60B in liabilities and more likely $80B and only $40B in assets.  Assets that are not doing well and a large portion of it is GE "stock"

https://www.youtube.com/watch?v=3jE10T250bo

So, who is buying Baker Hughes... Oil Services is not exactly thriving right now, not doing badly, just not awesome as my own business bottom line shows. 

Edited August 19, 2019 by footeab@yahoo.com

[DanilKa + 443]

Market seems to disagree with Harry Markopolos' assessment - aggressive accounting practices aren't illegal. There are doubts whether his action are driven by financial interest from short selling GE.

https://www.cnbc.com/2019/08/17/ge-stock-may-be-recovering-but-harry-markopolos-got-his-digs-in.html

BHGE announced plans for an "orderly separation" while ago - this report may force GE hand. HAL lost over $3B on the failed attempt and I doubt will have an appetite even if there is a chance for regulatory approval (why would they approve?).

[footeab@yahoo.com + 2,187]

1 hour ago, DanilKa said:

Market seems to disagree with Harry Markopolos' assessment - aggressive accounting practices aren't illegal. There are doubts whether his action are driven by financial interest from short selling GE.

https://www.cnbc.com/2019/08/17/ge-stock-may-be-recovering-but-harry-markopolos-got-his-digs-in.html

BHGE announced plans for an "orderly separation" while ago - this report may force GE hand. HAL lost over $3B on the failed attempt and I doubt will have an appetite even if there is a chance for regulatory approval (why would they approve?).

"market" is double number of guys purchasing due to large quick dip.... solves nothing about solvency of the company and the massive insane pension problem

"plans to sell in orderly fashion".... Still hasn't happened.  Now it is fait-a-compli

Different note as I do not work direct in service industry: Did Baker Hughes ever get anything from the GE merger that is used in the industry?   Always struck me as rather odd merger to begin with. 

[DanilKa + 443]

4 minutes ago, footeab@yahoo.com said:

"market" is double number of guys purchasing due to large quick dip.... solves nothing about solvency of the company and the massive insane pension problem

"plans to sell in orderly fashion".... Still hasn't happened.  Now it is fait-a-compli

Different note as I do not work direct in service industry: Did Baker Hughes ever get anything from the GE merger that is used in the industry?   Always struck me as rather odd merger to begin with. 

Pension deficit is not a reason for price dive - Markopolos allegations are. He is a legend but motives are challenged by other heavyweights.

GE had "GE Oil & Gas" unit. For GE buying Baker was a way to enter and play with the big boys (SLB and HAL). Not sure what was in it for BHI - they were struggling somewhat during and after failed merger with HAL. They got LNG/TPS business which wouldn't be available w/ HAL.

Here is segments breakdown from 31-Jul-19 report (BUY rating w/ PO $32; stock at $21 today - down 17.5% from the report)

From BofA Nov-16 report when merger was announced:

Proposed GE/BHI another tie-up without a premium
On Monday GE announced it agreed to merge its GE Oil & Gas subsidiary with Baker
Hughes (BHI), to create the second largest global oil services company behind only SLB
and leap-frogging past would-be buyer HAL. GE would contribute GE Oil & Gas plus
$7.4B to fund a $17.50/shr dividend to BHI shareholders and own 62.5% of the
combined company aka new BHI, while BHI shareholders would control 36.5%. Like the
Technip-FMC merger, the move suggests buyers remain unwilling to pay premiums to
recent valuations for full acquisitions and wary of the outlook for the cyclical services
industry. Going forward, we think deals in the sector could be smaller as GE focuses on
integrating BHI, taking the behemoth out of the M&A market for now. This could hurt
the value of companies that investors may have expected to be sellers of part of or all of
their businesses. Additionally, companies with holes in their portfolio may feel more
compelled to fill them in order to better compete with new-BHI’s larger, more integrated
service offering, notably HAL in artificial lift and fluids.

Focus on lower costs makes landscape competitive…
In our view, the deal’s focus on synergies reinforces the trend across the OFS landscape
to reduce costs through a greater suite of product and service offerings, which could
make the competitive landscape more challenging for players outside of the new ‘Big 3’
of SLB, HAL, and new-BHI, including Underperform-rated NOV and WFT. GE and BHI
expected $1.6B in synergies by 2020 from the combination, including $1.2B in cost
synergies and $400M in revenue synergies. The anticipated cadence of cost synergies
was $600M by 2018, $1.0B by 2019, and $1.2B by 2020. The breakdown was $400M in
procurement improvement, $200M in manufacturing & service footprint rationalization,
$200M in process optimization and $400M in SG&A/back office consolidation.
… plus sets up for lower oil price breakeven
While large service company integrations serve to cut costs and lower the breakeven
point for oil producers, this lower breakeven can help temper an oil price recovery.
Lower costs help oil producers restart at lower oil prices. In addition, we note the
bundling of services continues to play a role in large deals, both in M&A and in the
various JV’s that have been signed in the space over the last several years, yet we think
the jury is still out on whether or not customers want bundled services. We note that
GE’s oil forecast as part of the BHI deal assumes $45-60/bbl through 2019, which is
below the BofAML commodity team’s forecast for $70/bbl Brent in 2018E.
 

[John Foote + 1,135]

On 8/19/2019 at 3:57 AM, footeab@yahoo.com said:

Did Baker Hughes ever get anything from the GE merger that is used in the industry?   Always struck me as rather odd merger to begin with. 

Baker Hughes is more in the equipment business than service business. And in the Middle East GE is very well connected in the broader energy business. GE makes turbines that will inhale the shittiest hi-sulfur oil and sand and crank out electricity, an amazing installed base. There's actually a world class turbine refurb facility in the KSA. Maybe they were hoping to bundle, but the buyer side in the Middle East is too fractured for that synergy.