Energy conglomerate General Electric has reached an agreement with the US Department of Justice (DoJ) to proceed with the proposed merger of its oil and gas business with Baker Hughes.
In October last year, GE signed an agreement with Baker Hughes to form a combined equipment, technology and services provider.
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The agreement was sealed at $7.4bn, which will be paid by GE to Baker Hughes shareholders.
According to DoJ, the merger will create an oilfield service company with a combined revenue of $32bn and will reduce the number of competitive alternatives leading to higher prices and reduced service quality.
The completion of the merger hinges on DoJ’s condition that requires General Electric to divest its Water & Process Technologies business (GE Water).
As announced in March this year, GE Water will be sold to French waste and water group Suez for $3.4bn.
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By GlobalDataA settlement proposal was filed by the department’s antitrust division in the US District Court for the District of Columbia to resolve its concerns related to the merger.
US DoJ antitrust division acting assistant attorney general Andrew Finch said: “Competition to provide refinery chemicals and services benefits a vital sector of our economy.
“Today’s action will ensure that oil and gas refiners continue to receive competitive prices for the chemicals and services needed to produce oil, gasoline, and other refined petroleum and natural gas products.”
The transaction is expected to be closed by mid-year.
