This is a classic example of the value of first class relationships during a major merger of two large companies; Baker Hughes and GE. This project had over 300 touch points across both companies, involving treasury, finance, legal, compliance and business. Similarly, externally the project required regulators, rating agencies and banks to work together.

First class relationship is the key to this mega-merger

The challenge

Baker Hughes and GE were targeting the merger to close on July 3rd 2017 which required significant preparation from GE to accommodate the new company – renamed “Baker Hughes, a GE company”.

This project had over 300 touch points across both companies involving treasury, finance, legal, compliance and business. Similarly, externally the project required regulators, rating agencies and banks.

The merger identified the following key considerations:

• Internal spin-off before merger.
• Stakeholder management.
• Geographic coverage.
• Cash pool restructuring.

Pooja Nawani, Director, Global Banking Solutions explains, “There was a critical requirement to ensure that Oil and Gas accounts in the domestic cash pool structures in Indonesia, Malaysia, and Singapore were disconnected from their existing connection to GE’s main cash pool accounts before the sale date, in order to ensure funds belonging to oil and gas were not co-mingled with GE’s cash pool post close. Subsequently we needed to have independent cash pool arrangements for Oil and Gas to manage the liquidity requirements from day one post close.”

The solution

GE partnered with Citi on this critical project. Citi acted as a strategic partner to advise options for the final roadmap for the GE-Baker Hughes treasury architecture.

GE’s Oil and Gas accounts were pooled at its regional treasury hub in Singapore and the flows were part of a single GE account structure. As a result, GE designed an independent account and pool structure for GE Oil and Gas to support the merger with Baker Hughes at the deal close.

In order to facilitate the Oil and Gas/Baker Hughes cash management reengineering – new bank accounts, cash pool restructuring, credit line and new entity formations needed to be completed before the sale close date.

Given the span of the project, it required almost daily coverage and had strong interconnections at a global level from GE’s end, thus it was imperative that Asia was working from the same project charter as the other regions. GE required 20 new bank accounts across eight APAC markets. In addition, to support some of these new accounts, four new legal entities needed to be formed, which required full customer diligence (KYC) before the accounts could be opened.

Segregation of cash was the key KPI set for the new merged company. In parallel to the account opening, the cash pool restructuring project for GE’s Oil and Gas entities had to commence, which involved a two-phase restructuring project for GE’s existing US dollar pool in Singapore under GE’s existing cash pool header account.

In parallel, GE’s treasury team worked to integrate several other acquisitions throughout 2017 – among them Alstom and Doosan Engineering and Construction. GE teams worked tirelessly to integrate the acquired companies’ treasury footprint into GE’s fold, which involved cultural sensitivity as well as a strong execution strategy.

Best practice and innovation

• Highly customisable cash management processing, formation of new legal entity structures, business divisions funding needs and reporting requirements.
• Deal ownership by GE’s finance and treasury teams through sales activities and legal entity formation. Strong communication and partnership with the stakeholders internally and clear messaging as well as alignment externally for timely execution.
• Disciplined approach to planning, development and execution of the entire project ensured transference to a new company structure within two months across Asia.
• Ability to multi-task with Baker Hughes, Alstom Integration, Doosan Engineering and a number of other acquisitions/dispositions during 2017.

Pooja concludes, “This project required a complex restructuring in the cash management space; with multiple moving parts aimed towards a fixed deadline which was broadcast to global investors and key international parties. I am delighted with the results.”