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The Wall Street Journal: GE, Baker Hughes reach deal to merge oil and gas businesses

General Electric Co. reached a deal to combine its oil-and-gas business with Baker Hughes Inc., creating an energy powerhouse that would give GE a cost-effective way to play any recovery in the industry.

GE GE, +2.06% will contribute its oil-and-gas business and $7.4 billion in a special cash dividend to the new entity, which will have publicly traded shares and be 62.5% owned by GE and 37.5% owned by existing Baker Hughes BHI, +8.38% shareholders.

The Wall Street Journal reported last week that the companies were in talks about a potential transaction.

A combination creates a company with more than $32 billion in revenue that could cut costs to better compete with rivals such as Schlumberger Ltd.

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