General Electric Co , banking on a recovery in oil prices, said on Monday it would merge its oil and gas business with No. 3 oilfield services provider Baker Hughes Inc .
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GE will own 62.5 percent of the new company, which will have combined revenue of $32 billion, while Baker Hughes shareholders will own 37.5 percent.
Shareholders of Baker Hughes, which had a market value of about $26 billion as of Friday, will get a special one-time cash dividend of $17.50 per share after the deal closes.
The deal comes after Baker Hughes's planned merger with bigger rival Halliburton Co fell through in May due to opposition from regulators. That deal was valued at $34.6 billion when it was announced in November 2014.
GE and Baker Hughes said last week they were in talks over potential partnerships but did not disclose details.
The companies said on Monday the deal was expected to add 4 cents to GE's earnings per share by 2018 and 8 cents by 2020.
GE scaled back expectations for its full-year revenue and profit earlier in October as low oil prices hurt sales of the company's oil and gas infrastructure equipment.
The Wall Street Journal first reported on Thursday that GE and Baker Hughes were in talks.
Baker Hughes shares were up 5.7 percent at $62.50 in premarket trading on Monday. GE's shares were up 0.9 percent at $29.48 in light trading.
(Reporting by Ankit Ajmera and Swetha Gopinath in Bengaluru; Editing by Ted Kerr)