Chart Industries Inc shareholders on Monday approved its acquisition by Baker Hughes, in an all-cash transaction offering $210 per share.
The ballot saw 98.87 percent vote in favor of the merger, or about 35.35 million shares out of 35.75 million shares represented, according to a filing by Chart with the United States Securities and Exchange Commission.
“The transaction is expected to be completed by mid-year 2026, subject to customary conditions and the receipt of applicable regulatory approvals”, Chart affirmed in a separate online statement.
Baker Hughes chair and chief executive Lorenzo Simonelli said in a separate statement on Monday, “With the pending acquisition of Chart, we are undertaking a comprehensive evaluation of our capital allocation focus, business, cost structure and operations, with a view toward delivering additional value for our shareholders”.
Chart counts itself as a leading provider of technology, equipment and services related to liquefied natural gas (LNG), hydrogen, biogas and carbon dioxide capture. It says it has 65 global manufacturing locations and over 50 service centers including in the U.S., Australia and India.
The agreement gives Chart an enterprise value of $13.6 billion, the companies said in a joint statement July 29, noting Chart generated $4.2 billion in revenue and $1 billion in adjusted EBITDA for 2024.
“We know Chart well, having worked alongside them on many critical energy infrastructure projects. Their products and services are highly complementary to our offerings and strongly aligned with our intent to deliver distinctive and efficient end-to-end lifecycle solutions for our customers across their most critical applications”, Simonelli said in the statement.
“The combination positions Baker Hughes to be a technology leader that can provide engineering and technology expertise to meet the growing demand for lower-carbon, efficient energy and industrial solutions across attractive growth markets such as LNG, data centers and new energy”.
“Adding this high-growth, high-margin business to our Industrial & Energy Technology segment will deliver strong earnings accretion and returns, contributing to an improved growth and margin profile”, Simonelli added.
The companies said, “The acquisition also broadens Baker Hughes’ exposure to more durable industrial sectors including industrial gas, metals and mining, and food and beverage, significantly increasing Baker Hughes’ addressable market and through-cycle growth potential”.
“Baker Hughes’ core competencies in rotating equipment, flow control and digital technology pair well with Chart’s competencies in heat transfer, air and gas handling, and process technologies”, they added.
“Baker Hughes’ expansive service footprint is expected to increase service rates for Chart’s installed base driving more profitable, recurring revenue across the combined portfolio”, the companies said.
“Baker Hughes has identified $325 million of annualized cost synergy opportunities by the end of year three. Baker Hughes intends to drive productivity improvements by leveraging Baker Hughes’ scale in manufacturing and consolidating the companies’ supply chains, as well as optimizing costs across the SG&A and R&D functions”.
Baker Hughes has secured bridge debt financing from Goldman Sachs Bank USA, Goldman Sachs Lending Partners LLC and Morgan Stanley Senior Funding Inc for the purchase. Baker Hughes expects the arrangement to be replaced with permanent debt financing before the completion of the transaction, according to the joint statement.
“Baker Hughes remains committed to maintaining its A credit rating and will use its strong free cash flow and expected divestiture proceeds to support debt reduction while maintaining, and growing over time, its strong dividend”, the statement added.
“Baker Hughes projects net leverage at close will be 2.25x and will de-lever to 1.0-1.5x net leverage within 24 months after close.
“Flexibility will be maintained on share repurchases until leverage reaches the 1.0-1.5x target, after which Baker Hughes intends to return 60-80 percent of FCF to shareholders”.
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