Baker Hughes Announces Sale of PSI Product Line for $1.15B in Cash

Baker Hughes Company BKR, a leading global energy technology company, recently announced that it has inked an agreement with Crane Company CR for the sale of its Precision Sensors & Instrumentation (“PSI”) product line, which is part of its Industrial & Energy Technology (“IET”) business segment. The PSI product line offers sensor-based technologies and associated instrumentation. The deal involves a total consideration of $1.15 billion in cash.

Details of PSI Product Line

The PSI product line covers three brands — Druck, Reuter-Stokes and Panametrics. These brands provide sensor-based technologies for sensing and assessing pressure conditions, detecting radiation, and analyzing flow, moisture, and gas across several industries and sectors. The transaction involves selling all aspects of the business, including all assets available to PSI, its geographical footprint and associated resources. Crane Company will also have access to patents, trademarks, internal software, and other intellectual property related to the sale of BKR’s product line.

BKR’s Portfolio Management Initiatives

Baker Hughes has recently sold its Surface Pressure Control Business to Cactus, Inc. in a transaction valued at $344.5 million. BKR will be forming a joint venture with Cactus, offering its surface pressure control (“SPC”) product line. The sale of its SPC and PSI product lines demonstrates Baker Hughes’ focus on portfolio optimization to generate long-term value. The divestments of these assets enable the company to focus on high-performing assets that provide revenue and cash flow stability. Baker Hughes plans to undertake a disciplined approach to capital allocation by redirecting capital toward high-return business opportunities.

The sale of the PSI product line advances BKR’s broader goal to focus on IET’s core strengths, including rotating equipment, flow control, decarbonization initiatives and performance optimization of related assets. The company is committed to generating long-term value for its shareholders. The deal with Crane Company is expected to be concluded by the end of 2025 or early 2026.

Crane Company’s Expansion

The Crane Company is involved in manufacturing highly engineered industrial products in the United States and international markets. The company has two business segments, namely Aerospace & Electronics and Process Flow Technologies. The Aerospace & Electronics segment is involved in the development of original equipment and engineered components that are widely used in the aerospace, defense, and space markets. Crane’s Process Flow Technologies segment offers a comprehensive range of products, including lined pipes, commercial pumps and valves, and instrumentation & sampling systems for various industrial end markets. 

The acquisition of PSI complements its existing product portfolio while boosting its technological capabilities in core end markets, including aerospace, defense, and process sensing, among others. CR noted that the deal aligns with the company’s strategic and financial targets. The acquired product line is expected to yield long-term sales growth in line with Crane’s expectations and a 10% return on invested capital by the fifth year following the deal's closure. 

Zacks Rank & Key Picks

Both BKR and CR currently carry a Zacks Rank #3 (Hold).

Some better-ranked stocks from the energy sector are Flotek Industries Inc. FTK and Energy Transfer ET. While Flotek Industries sports a Zacks Rank #1 (Strong Buy) at present, Energy Transfer carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Flotek Industries specializes in green chemistry, which provides innovative solutions aimed at reducing the environmental impact of the energy industry. Flotek develops specialty chemicals tailored for both domestic and international energy producers, as well as oilfield service companies. These chemicals not only help reduce the environmental impact of hydrocarbon production but also lower operational costs.

Energy Transfer is a midstream player that owns and operates one of the most diversified portfolios of energy assets in the United States. Boasting a pipeline network extending more than 130,000 miles, its network spans over 44 states. With a presence in all the major U.S. production basins, ET’s outlook seems positive.

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This article originally published on Zacks Investment Research (zacks.com).

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