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Baker Hughes (NASDAQ:BKR), the $38.6 billion energy technology company with a perfect Piotroski Score according to InvestingPro, announced plans to acquire Continental Disc Corporation in an all-cash transaction valued at $540 million, as the oilfield services company continues to focus on higher-margin businesses.
UBS maintained its Neutral rating on Baker Hughes stock Tuesday with a price target of $40.00 following the announcement.
The acquisition is expected to be immediately accretive to Baker Hughes’ Industrial & Energy Technology segment margins, supported by Continental Disc’s approximately 80% recurring revenue through maintenance and replacement needs.
Continental Disc’s business model aligns with Baker Hughes’ strategy of high-grading its portfolio with a focus on higher-margin life-cycle-based revenues.
The strategic move should reduce cyclicality while driving long-term earnings growth for Baker Hughes, according to UBS.
In other recent news, Baker Hughes has announced its acquisition of Continental Disc Corporation for approximately $540 million. This all-cash transaction is expected to enhance Baker Hughes’ Industrial & Energy Technology segment and is anticipated to be immediately accretive to earnings and cash flow per share. Additionally, Baker Hughes has sold its Precision Sensors & Instrumentation product line to Crane Company (NYSE:CR) for $1.06 billion, a move that is expected to improve the company’s profit margins. UBS has maintained a Neutral rating on Baker Hughes with a $40 price target, following the sale of this product line.
In another development, Baker Hughes is set to sell a 65% controlling interest in its Surface Pressure Control business to Cactus (NYSE:WHD) Companies for $344.5 million. Baker Hughes will retain a 35% stake in the SPC business, with an option for Cactus to acquire the remaining stake two years post-closure. This transaction is valued at $530 million and is expected to close in the second half of 2025. These strategic moves are part of Baker Hughes’ ongoing efforts to optimize its portfolio and focus on more profitable segments.
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