General Electric has merged its oil and gas division with Baker Hughes to form a new powerhouse in the oilfield services industry as the companies seek to ride out the downturn.

The new listed company will have $32bn of combined revenues and be 62.5pc owned by GE with Baker Hughes owning the rest.

GE will pay $7.4bn to fund a $17.50-per-share special dividend to Baker Hughes shareholders.

Jeff Immelt, chairman and chief executive of GE, said the deal created “an industry leader, one that is ideally positioned to grow in any market”.

GE said that the “new” Baker Hughes combined its “oil and gas technology, manufacturing and digital platform with Baker Hughes’ oilfield services offerings and technologies”. It expects synergies of $1.6bn by 2020. 

The deal comes in a period of consolidation in the oilfield services sector as companies try to cut costs and make themselves more competitive following the crash in oil prices.

Baker Hughes had been due to merge with bigger rival Halliburton in a deal first announced in late 2014, but that was scrapped earlier this year following opposition from regulators.

Industry leader Schlumberger took over smaller oilfield services player Cameron International earlier this year. 

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