Baker Hughes is nearing a deal for the acquisition of Chart Industries, a gas liquefaction service and equipment provider, for $13.6 billion in cash, the Financial Times has reported, citing unnamed sources in the know.
The publication noted that Chart had earlier made plans to merge with sector player Flowserve. Indeed, last month the two put out a press release saying they had reached a definitive agreement to merge as equals in a $19-billion all-stock deal.
“With an installed base of more than 5.5 million assets in more than 50 countries, the combined company will address the full customer lifecycle from process design through aftermarket support,” Chart and Flowserve said in the release. They also set up a dedicated website for the combined company.
According to the FT report, however, Baker Hughes is about to swoop in and snag Chart from its prospective partner, although its unnamed sources said the deal is not final and the situation may change.
An acquisition of Chart would strengthen Baker Hughes’ industrial and energy technology business unit, which was a major contributor to the company’s second-quarter profit. In its report, released earlier this month, Baker Hughes said it had an order backlog of $43.5 billion for the industrial and energy technology division, with chief executive Lorenzo Simonelli noting that “Importantly, order momentum remained strong, supported by more than $550 million of data center related orders, despite the absence of large LNG awards.”
Yet LNG is an important profit-maker for Baker Hughes, and the addition of Chart Industries to its business structure would further strengthen its position in this segment, especially now that Trump has gotten the EU to agree to buy massive amounts of energy, including LNG. While the value of energy exports that Trump got the EU to sign up for is unrealistic, chances are that the EU will considerably increase its intake of U.S. liquefied gas.
By Irina Slav for Oilprice.com
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