Baker Hughes, Cactus Enter Joint Venture for Surface Pressure Control Services

On Monday, Baker Hughes Company (NASDAQ:BKR) and Cactus Inc. (NYSE:WHD) announced a new joint venture, with Baker Hughes contributing its surface pressure control/SPC product line. Cactus will become the majority owner and operator and hold a 65% stake, while Baker Hughes will retain 35% ownership. This move is part of Baker Hughes’ strategy to optimize its portfolio and reallocate capital towards higher-return opportunities.

A drilling rig on a remote oilfield, its tower silhouetted against a setting sunset.

This joint venture will operate independently from Cactus’ existing Pressure Control business. It aims to maintain leadership in the international market for surface wellhead & production tree systems, and benefit from Cactus’ expertise in unconventional oil & gas. This acquisition transforms Cactus’ geographic footprint, with ~85% of SPC revenues generated in the Middle East and no material US external sales.

Cactus will purchase its 65% interest in SPC for $344.5 million, based on a total enterprise value of $530 million. Cactus plans to use its cash on hand (around $348 million as of March 31) and potentially its undrawn $225 million revolving credit facility for the upfront payment. The joint venture’s balance sheet will also be capitalized with $70 million in operating cash at close, with Baker Hughes contributing 35% of that amount, which will be repaid over time. The transaction is expected to close in H2 2025, subject to customary regulatory approvals. Cactus will have the right to acquire the remaining 35% after 2 years, and Baker Hughes will have the right to require Cactus to purchase it.

Baker Hughes Company (NASDAQ:BKR) provides a portfolio of technologies and services to the energy and industrial value chain worldwide. It operates through two segments: Oilfield Services & Equipment/OFSE and Industrial & Energy Technology/IET.

Cactus Inc. (NYSE:WHD) designs, manufactures, sells, and rents engineered pressure control & spoolable pipe technologies internationally.

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Disclosure: None. This article is originally published at Insider Monkey.