DEFA14A: Baker Hughes to Acquire Chart Industries for $13.6B Cash

Baker Hughes Company will acquire Chart Industries, Inc. for $210 per share in cash, totaling $13.6 billion, following Chart's termination of its prior merger agreement with Flowserve Corporation.

Summary

• Baker Hughes Company will acquire Chart Industries, Inc. for $210 per share in cash, representing a total enterprise value of $13.6 billion.
• Chart's board of directors unanimously approved the merger, determining Baker Hughes' offer to be a 'Superior Chart Proposal' compared to its previous agreement with Flowserve.
• Chart terminated its prior merger agreement with Flowserve Corporation on July 28, 2025.
• Chart will pay Flowserve a termination payment of $266 million, comprising a $250 million termination fee and an additional $16 million for expense reimbursement.
• Baker Hughes will cover $258 million of the Flowserve termination payment on Chart's behalf, with Chart paying the remaining $8 million.
• Outstanding Chart equity awards, including stock options, restricted stock units (RSUs), and performance stock units (PSUs), will be converted into cash payments based on the $210 per share merger consideration.
• PSUs will vest based on a pro-rata portion of the performance period completed prior to closing, with performance deemed satisfied at the greater of target or actual levels.

Sentiment

Score: 8

Explanation: The filing announces a significant, value-accretive acquisition for Baker Hughes, offering immediate cash value to Chart shareholders. The strategic rationale is strong, with clear financial benefits like EPS accretion and substantial synergies. While there are standard risks associated with large mergers, the overall tone and projected outcomes are highly positive for both companies' shareholders, especially Chart's.

Positives

• The all-cash transaction delivers immediate value to Chart shareholders at $210 per share.
• The acquisition is expected to be immediately accretive to Baker Hughes' growth, margins, and cash flow.
• Baker Hughes anticipates double-digit EPS accretion in the first full year after the transaction closes.
• Baker Hughes has identified $325 million in annualized cost synergy opportunities, expected to be realized by the end of the third year post-acquisition.
• The acquisition expands Baker Hughes' offerings in attractive high-growth markets, including data centers, space, and New Energy.
• It broadens Baker Hughes' exposure to more durable industrial sectors such as industrial gas, metals and mining, and food and beverage.
• The combination strengthens Baker Hughes' lifecycle revenue mix by creating opportunities for growth in high-value aftermarket products and services.
• Baker Hughes' expansive service footprint is expected to increase service rates for Chart's installed base, driving more profitable, recurring revenue.
• Chart's board of directors unanimously approved the transaction, recognizing it as a 'Superior Chart Proposal'.

Negatives

• Chart incurred a $266 million termination payment to Flowserve Corporation for the prior merger agreement, although Baker Hughes will cover $258 million of this amount.
• Chart is responsible for the remaining $8 million portion of the Flowserve termination payment.
• The merger agreement includes potential significant termination fees: $250 million payable by Chart to Baker Hughes under certain circumstances, or $500 million payable by Baker Hughes to Chart if regulatory approvals fail.
• Baker Hughes will incur substantial indebtedness to finance the transaction, projecting net leverage at close of 2.25x.
• The transaction carries inherent risks related to obtaining regulatory approvals, potential delays, and the possibility of competing offers.
• There are risks of business disruption and potential difficulties in employee retention during the pendency of the proposed merger.

Risks

• Regulatory approvals may not be obtained or could be subject to unanticipated conditions, limitations, or restrictions.
• Failure to receive the required transaction-related approval from Chart's stockholders on a timely basis or at all.
• Potential delays in consummating the proposed merger transaction, including as a result of failure to receive any regulatory approvals or conditions placed on such approvals.
• The possibility that competing offers or acquisition proposals may be made.
• The occurrence of any event, change, or circumstance that could give rise to the termination of the merger agreement, potentially requiring Chart or Baker Hughes to pay a termination fee.
• Unforeseen or unknown liabilities.
• Challenges in obtaining customer, stockholder, regulatory, and other stakeholder approvals and support.
• Unexpected future capital expenditures.
• Potential litigation relating to the proposed merger transaction that could be instituted against Chart, Baker Hughes, or their respective directors.
• The possibility that the transaction may be more expensive to complete than anticipated due to unexpected factors or events.
• The effect of the announcement, pendency, or completion of the proposed merger transaction on the parties' business relationships and business generally.
• Risks that the proposed merger transaction disrupts current plans and operations of Chart or Baker Hughes.
• Potential difficulties in employee retention as a result of the proposed merger, as well as disruption of management and ongoing business operations during its pendency.
• Uncertainties as to whether the proposed merger transaction will be consummated on the anticipated timing or at all.
• Changes in commodity prices.
• Negative effects of this announcement, and the pendency or completion of the proposed merger transaction on the market price of Chart's common stock and/or operating results.
• Rating agency actions and the ability to access shortand long-term debt markets on a timely and affordable basis.
• Various events that could disrupt operations, including severe weather, cybersecurity attacks, security threats, governmental response, and technological changes.
• Labor disputes; changes in labor costs and labor difficulties.
• The effects of industry, market, economic, political, or regulatory conditions outside of Chart's or Baker Hughes' control.
• The possibility that Baker Hughes may not be able to obtain sufficient financing or otherwise have sufficient financial resources to pay the merger consideration on a timely basis or otherwise.
• Legislative, regulatory, and economic developments targeting public companies in the industrial sector.
• Global supply chain disruptions and the current inflationary environment.
• The substantial dependence of Chart's sales on the success of the energy, chemical, power generation, and general industries.
• Economic, political, and other risks associated with Chart's international operations.
• Potential adverse effects resulting from the implementation of tariffs and related retaliatory actions and changes to or uncertainties related to tariffs and trade agreements.

Future Outlook

The transaction is expected to be completed by mid-year 2026. Baker Hughes anticipates the acquisition to be immediately accretive to its growth, margins, and cash flow, with double-digit EPS accretion in the first full year. Baker Hughes projects net leverage at close to be 2.25x, aiming to de-lever to 1.0-1.5x within 24 months after closing. The combined entity is positioned to be a technology leader in lower-carbon, efficient energy and industrial solutions, expanding into high-growth markets like data centers, space, and New Energy, and driving aftermarket growth.

Management Comments

• "This acquisition is a milestone for Baker Hughes and a testament to our strong financial execution and strategic focus as we continue to define our position as a leading energy and industrial technology company." Lorenzo Simonelli, Baker Hughes Chairman and CEO.
• "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." Lorenzo Simonelli, Baker Hughes Chairman and CEO.
• "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." Lorenzo Simonelli, Baker Hughes Chairman and CEO.
• "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." Lorenzo Simonelli, Baker Hughes Chairman and CEO.
• "This all-cash transaction with Baker Hughes delivers immediate value to Chart shareholders." Jill Evanko, Chart President and CEO.
• "Thanks to the outstanding work of our global OneChart team, we have successfully built a product and solution portfolio that spans front-end engineering design through aftermarket services." Jill Evanko, Chart President and CEO.
• "Our complementary solutions fit seamlessly with Baker Hughes Industrial & Energy Technology segment, and together we can help our customers solve the most critical energy access and sustainability needs." Jill Evanko, Chart President and CEO.
• "Our Board is proud to deliver this outcome to our shareholders." Jill Evanko, Chart President and CEO.

Industry Context

This acquisition represents a significant consolidation in the energy and industrial technology sectors, with Baker Hughes aiming to strengthen its position as a leader in lower-carbon and efficient energy solutions. By acquiring Chart Industries, a specialist in gas and liquid molecule handling, Baker Hughes expands its capabilities across the entire liquid gas supply chain and gains deeper exposure to secular growth drivers such as LNG, hydrogen, biogas, CO2 capture, data centers, and New Energy. This move aligns with broader industry trends towards decarbonization and energy transition, allowing Baker Hughes to offer more comprehensive end-to-end solutions and enhance its aftermarket service penetration. The strategic rationale emphasizes complementary product capabilities and leveraging scale for synergy realization, positioning the combined entity to better compete in evolving energy and industrial markets.

Comparison to Industry Standards

• The acquisition multiple of ~9x Chart Consensus 2025 EBITDA on a fully synergized basis suggests a valuation that incorporates significant future benefits, which can be compared to recent M&A transactions in the industrial gas, energy technology, and decarbonization sectors.
• Baker Hughes' projected net leverage of 2.25x at close and target of 1.0-1.5x within 24 months indicates a disciplined approach to debt management post-acquisition, which can be benchmarked against typical leverage ratios for large industrial and energy companies undertaking significant M&A.
• The expected $325 million in annualized cost synergies by year three is a substantial figure, which can be compared to synergy targets in other large-scale industrial mergers to assess its ambition and feasibility.
• The focus on expanding into 'New Energy' markets like hydrogen and CO2 capture, alongside traditional LNG, positions the combined company to capitalize on the energy transition, a trend seen across major industrial players like Siemens Energy, GE Vernova, and Honeywell, who are also investing heavily in sustainable technologies.
• The emphasis on strengthening 'lifecycle revenue mix' and 'aftermarket growth' through increased service penetration aligns with strategies employed by other industrial equipment manufacturers (e.g., Caterpillar, Cummins) to secure more stable, recurring revenue streams beyond initial equipment sales.

Corporate Governance

Legal Proceedings

• The filing mentions 'potential litigation relating to the proposed merger transaction that could be instituted against Chart, Baker Hughes or their respective directors.'
• Chart and Baker Hughes will cooperate in the defense and settlement of any such litigation.

Stakeholder Impact

• Shareholders (Chart): Will receive immediate cash value of $210 per share, representing a premium for their holdings.
• Shareholders (Baker Hughes): Expected to benefit from immediate accretion to growth, margins, and cash flow, and double-digit EPS accretion in the first full year.
• Employees (Chart): Continuing employees will receive no less favorable base salary/wage, target annual cash bonus opportunities, and severance policies for one year post-merger. Other compensation and benefits will be substantially comparable. Service credit will be provided for eligibility, vesting, vacation, paid time off, and severance. However, there is a risk of 'potential difficulties in employee retention' and 'disruption of management and ongoing business operations' during the transition.
• Customers: The combined company aims to provide 'enhanced value-creation solutions' and 'meet the growing demand for lower-carbon, efficient energy and industrial solutions' through expanded capabilities.
• Suppliers: Potential for consolidation of supply chains and optimization of costs, which could impact existing supplier relationships.
• Creditors: Baker Hughes will incur substantial indebtedness to finance the acquisition, but aims to maintain an A credit rating and de-lever within 24 months. Chart's existing credit facility will be terminated, and Chart Notes may be subject to prepayment, redemption, or exchange offers.

Next Steps

• Chart to prepare and file a preliminary proxy statement with the SEC.
• Chart to convene and hold a stockholder meeting to obtain Chart Stockholder Approval.
• Baker Hughes to execute a written consent approving the merger as sole stockholder of Merger Sub.
• Baker Hughes to replace bridge debt financing with permanent debt financing prior to closing.
• Parties to seek expiration or termination of HSR Act waiting period and other foreign antitrust/regulatory clearances.
• Parties to work towards consummation of the merger by mid-year 2026.
• Chart to terminate all commitments under its Credit Facility and repay obligations on Closing Date.
• Baker Hughes or its Affiliates may request Chart to effect prepayment, redemption, termination, or discharge of Chart Notes.
• Baker Hughes or its Affiliates may request Chart to commence and participate in exchange offers or tender offers for Chart Notes.
• Chart Common Stock, Chart Preferred Stock, and any other Chart securities to be de-listed from NYSE and de-registered under the Exchange Act post-Effective Time.

Key Dates

Recommendation

The acquisition of Chart Industries by Baker Hughes is a highly strategic move that offers compelling financial and operational benefits. The all-cash offer provides immediate and certain value to Chart shareholders at a significant premium. For Baker Hughes, the transaction is expected to be immediately accretive to key financial metrics (growth, margins, cash flow) and deliver double-digit EPS accretion in the first year. The identified $325 million in annualized cost synergies further enhances the financial upside. Strategically, it expands Baker Hughes' presence in high-growth, future-oriented markets like data centers, space, and New Energy, aligning with global decarbonization trends and strengthening its recurring revenue streams through enhanced aftermarket services. While integration risks and debt incurrence exist, Baker Hughes' commitment to de-leveraging and maintaining a strong credit rating, combined with the unanimous board approvals and the 'Superior Chart Proposal' designation, indicates a well-considered and highly beneficial transaction for both parties, particularly for Baker Hughes' long-term growth profile.

Keywords

Merger, Acquisition, Baker Hughes, Chart Industries, Cash Transaction, Energy Technology, Industrial Technology, LNG, Hydrogen, Biogas, CO2 Capture, Synergies, SEC Filing, Corporate Acquisition, Shareholder Value, Industrial Gas, Data Centers, New Energy, Decarbonization