Baker Hughes Completes $13.6 Billion Chart Industries Cash Deal
The acquisition expanded Baker Hughes’ industrial portfolio and recurring aftermarket-services business.
Baker Hughes Company (BKR) completed its acquisition of Chart Industries, Inc. (GTLS) in an all-cash transaction valued at $13.6 billion, adding thermal-management and process technologies to its Industrial & Energy Technology business. The combination is expected to support more durable earnings and cash flow through a broader industrial portfolio and a larger recurring aftermarket-services operation.
Chart shareholders received $210.00 a share in cash when the merger took effect. Each outstanding Chart share, apart from specified excluded and appraisal shares, was canceled and converted into the right to receive the cash consideration. Chart survived the merger as a wholly owned Baker Hughes subsidiary.
Baker Hughes financed the purchase with cash on hand, proceeds from $6.5 billion and €3.0 billion of senior notes issued in March, and borrowings under term-loan agreements. Funds were also deposited to redeem roughly $1.97 billion of Chart senior notes, while Chart’s outstanding credit-agreement borrowings were repaid and its commitments terminated.
The acquisition joined Baker Hughes’ rotating-equipment, flow-control and digital capabilities with Chart’s heat-transfer, air-and-gas-handling and process technologies. The expanded installed base will create more opportunities to sell service, repair and digital offerings over the operating life of customers’ equipment, strengthening the recurring-revenue mix. “Chart’s thermal management solutions bring complementary capabilities and aftermarket service offerings that accelerate our portfolio strategy,” Baker Hughes Chairman and Chief Executive Officer Lorenzo Simonelli said.
Chart designed and manufactured equipment used across the liquid-gas supply chain, spanning engineering, installation, service, preventive maintenance and digital monitoring. Its technologies served liquefied natural gas, hydrogen, biogas and carbon-capture applications, and its manufacturing and service network extended across the Americas, Europe and Asia. That footprint gives Baker Hughes additional exposure to industrial gas, power, data centers and lower-carbon infrastructure while widening the customer base for its service organization.
Baker Hughes identified $325 million of annualized cost synergies by the end of the third year, drawing on manufacturing productivity, supply-chain consolidation and lower selling, administrative and research costs. The acquisition is expected to be immediately accretive to growth, margins and cash flow, with double-digit adjusted earnings-per-share accretion in the first full year of ownership. Baker Hughes plans to use free cash flow and divestiture proceeds to reduce debt while maintaining its A credit rating and supporting dividend growth.
With the transaction closed, execution turns to integrating Chart’s operations and converting the combined installed base into higher service penetration. The durability Baker Hughes expects from the deal will depend on delivering those cost savings while extending its aftermarket reach across Chart’s energy and industrial markets.