Tue. Oct 19th, 2021

The shares of Baker Hughes Co. rose on Friday, after the oil products and services company announced plans to buy shares for the first time in a year, with the goal of helping improve what General General Co. sells.

Baker Hughes said its board of directors has authorized the company, through Baker Hughes Holdings LLC (BHH), to recover shares worth up to $ 2 billion. At current prices, they could account for approximately 9% of the outstanding shares.

BKR shares,
+ 0.38%
rose 0.8% in the morning trading, to reduce the weakness of its peer group and the wider market, as the XLE fund of Business Exchange SPDR Energy Select Sector
-1.89%
fell 1.7% and the S&P 500 SPX index,
-0.54%
threw 0.5%.

Shares have now risen 6.6% since reporting second-quarter results ahead of the July 21 opening.

If the company repurchases shares in the current third quarter, it would be the first to do so since the third quarter of 2020, according to reports submitted to the Securities and Exchange Commission.

“We are pleased that Baker Hughes’ strong balance sheet and solid cash flow profile allow us to not only return value to shareholders through our regular quarterly dividend and share repurchase, but also allow us to invest for the growth and the position of leading the energy transition, “said Lorenzo Simonelli, chief executive.

As part of the repurchase program, Baker Hughes and BHH are authorized to enter into an agreement with General Electric GE,
-2.14%,
which is currently the fourth largest shareholder according to FactSet, by BHH to GE shares, with the proceeds distributed to Baker Hughes.

Read on too: GE shares jump after beating gains by surprise, changed by surprise towards positive free cash flow.

FactSet, MarketWatch

In July 2020, GE said it would launch a program to “completely monetize” its stake in Baker Hughes for about three years. At the time, GE said the fair value of its stake in Baker Hughes was $ 5.9 billion.

Earlier this week, GE revealed that it raised $ 1 billion in the second quarter of the sale of Baker Hughes shares and planned to sell shares worth about $ 1.3 billion in the current third. quarter.

On July 21, at Baker Hughes’ post-earnings conference call with analysts, BofA Securities analyst asked CFO Brian Worrell, according to a FactSet transcript, “why not make a repurchase to partially offset the continued drag of our GE shares? “Who continues to sell their stake?

Worrell responded by saying beyond small-scale acquisitions and investments in new energy, “stock repurchases can certainly be an attractive price for the capital allocation portfolio.”

Shares of Baker Hughes have risen 2.4% year-on-year so far, while the energy ETF has risen 30.2% and the S&P 500 has advanced 17.1%.

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