Ananym Capital sees upside if Baker Hughes spins off its oilfield services unit - Article

Company: Baker Hughes (BKR)

Baker Hughes is an energy technology company operating in two segments:

• Oilfield Services & Equipment (OFSE): Provides products and services across the well lifecycle, including well construction, completions, production solutions, and subsea/surface pressure systems.

• Industrial & Energy Technology (IET): Supplies gas turbines, compressors, power-generation solutions, and new-energy technologies for LNG, oil and gas, refining, petrochemicals, and industrial markets.

Activist: Ananym Capital Management
A New York-based activist fund launched in 2024 by Charlie Penner (ex-JANA, Engine No. 1) and Alex Silver (formerly P2 Capital Partners). The firm targets undervalued, high-quality companies and prefers collaboration but is willing to escalate if necessary. It manages about $260 million across 10 positions.

What’s happening
On Oct. 21, Ananym disclosed a stake in Baker Hughes and urged the company to spin off its OFSE division, arguing the move could lift the stock by at least 60%.

Behind the scenes
Baker Hughes was formed from the 2017 merger of Baker Hughes and GE Oil & Gas. It now operates two main businesses:

• IET (55% of projected 2025 revenue / 60% EBITDA): A long-cycle industrial business benefiting from strong positions in LNG turbomachinery, power generation, and rapidly growing data-center demand. IET is nearing 20% EBITDA margins, supported by long-term, high-margin aftermarket services. The pending acquisition of Chart Industries is expected to further strengthen the segment.

• OFSE (45% / 40%): A short-cycle, commodity-sensitive oilfield services business. Management has improved margins by exiting low-return ventures, focusing on international markets, and tightening pricing discipline. Despite progress, OFSE continues to weigh on Baker’s valuation.

Baker trades at ~9x EBITDA - closer to OFSE peers (6–7x) than industrial peers (16–18x) - even though IET generates most of the company’s earnings. A sum-of-the-parts view suggests a ~13x multiple.

Ananym argues that separating OFSE could unlock roughly 51% upside, even after assuming $100 million in dis-synergies, with further upside from IET’s long-term growth and margin expansion.

With Baker already reviewing its capital allocation and operations, and Ananym expressing confidence in management, the campaign is expected to remain cooperative. However, if management fails to act, Ananym could become more assertive.