(Bloomberg) — It was a July-to-November romance
Little more than four months after General Electric Co. married its oil and natural gas unit to Baker Hughes’s technical services business, GE’s eyes are wandering. Like a divorce attorney seeking to cloak the sordid details of an ugly breakup in elegant legalese, CFO Jamie Miller told reporters on Monday that the Boston-based industrial behemoth seeks “exit optionality.”
In other words, GE may want to ditch Baker Hughes. According to a 57-page strategy presentation GE distributed to analysts and investors, Baker’s old-fashioned reliance on volatile commodity cycles and the near-term improbability of any meaningful recovery in demand for its services is cramping GE’s style.
GE CEO John Flannery announced plans Monday to drastically shrink the company founded by Thomas Edison by selling multiple business lines, downsizing the board of directors and slashing the dividend for only the second time since the Great Depression.
The Baker Hughes deal gave GE access to that company’s high-tech pumps used in oil wells and other innovative gear. But the target shed other offerings like onshore fracking and North American cementing before the pact was closed.
The way Flannery tells it, the company knew things might end sadly all along.
“The core conception of the deal is this was a stronger asset combined than we had on our own and it created an optionality in terms of a listed company where we could go,” said Flannery, who inherited the relationship when he succeeded Jeff Immelt in August. “The transaction was contemplating something like this at the outset, as one of the options for the company.”