Cactus to acquire 65% of Baker Hughes’ surface pressure control business in $344.5m deal, marking international pivot

Why Is Cactus Buying Into Baker Hughes’ Surface Pressure Control Business?

Cactus, Inc. (NYSE: WHD) announced a landmark $344.5 million agreement to acquire a 65% controlling interest in the Surface Pressure Control (SPC) business of Baker Hughes Company (NASDAQ: BKR), marking one of the oilfield equipment sector’s most significant international expansions in recent years. The deal creates a new joint venture structure with Cactus taking operational leadership and Baker Hughes retaining a 35% non-controlling stake.

SPC, a provider of wellheads and production tree equipment, has minimal exposure to the U.S. market but generates nearly 85% of its revenues from the Middle East—a key growth geography as global oil and gas capex tilts toward long-cycle international and offshore projects. With this acquisition, Cactus transitions from a North America-centric player to a globally diversified pressure control manufacturer with deeper aftermarket potential and enhanced earnings visibility.

What Makes the SPC Acquisition Strategic for Cactus?

This move directly aligns with industry-wide shifts in capital allocation. Over the past five years, oilfield services companies have pivoted away from over-reliance on North American shale markets, which have shown signs of structural consolidation and margin compression. In contrast, the Middle East—home to national oil companies with multi-decade project horizons—has emerged as a focal point for high-volume, long-term equipment procurement.

Cactus, known for its capital-light, high-margin manufacturing model, gains a vital beachhead through SPC, whose legacy stems from the former Wood Group Pressure Control business. Several members of the current Cactus leadership, including Chairman and CEO Scott Bender, previously operated these assets, which strengthens integration prospects.

The SPC business also comes with a $600 million-plus backlog as of December 31, 2024, spanning both product orders and aftermarket service contracts. This backlog adds forward visibility to revenue and free cash flow, positioning Cactus more competitively within a cyclical and consolidation-prone industry.

What Are the Deal Terms and Financial Implications?

Under the agreement, Cactus will acquire the 65% stake for $344.5 million, which values SPC at a total enterprise value of $530 million on a cash-free, debt-free basis. The deal includes a joint venture capitalization of $70 million in operating cash, of which Baker Hughes will contribute 35%—a portion to be repaid to them over time. The agreement also includes a call/put structure exercisable after two years, allowing Cactus to acquire the remaining 35% or requiring them to do so at Baker Hughes’ discretion.

Cactus intends to fund the deal through a combination of its existing cash reserves, which stood at $348 million as of March 31, 2025, and a $225 million undrawn revolving credit facility. The company has left open the possibility of additional debt issuance to preserve credit facility liquidity ahead of the deal’s anticipated closure in H2 2025.

Management emphasized that the deal is expected to be earnings accretive from day one while preserving the firm’s conservative capital structure. The company does not anticipate significant net leverage post-closing.

How Are Analysts and Investors Reacting to the Deal?

Investor response to the announcement has been cautiously optimistic. Shares of Cactus, Inc. (NYSE: WHD) traded in a tight range following the news, with analysts noting that while the strategic logic is sound, execution risk remains—especially given the operational complexities of Middle Eastern markets.

Brokerages covering oilfield services, including Raymond James and Piper Sandler, highlighted the synergy potential due to overlapping product families and supply chain optimization. Given Cactus’ historical operating margins above 25% and return on capital employed consistently outperforming peers like TechnipFMC and NOV, many expect the company to unlock higher margin contribution from SPC over time.

Several institutional investors appear to support the deal’s financial structure, particularly the phased ownership path and the balance sheet’s resilience. Some trading desks noted that mutual fund and pension allocations into oilfield equipment have recently risen, with increased weighting toward internationally exposed names—a trend that this transaction directly caters to.

What Are the Broader Sector Trends Driving This Transaction?

The acquisition comes amid a broader restructuring of the global oilfield equipment landscape. Baker Hughes itself has been streamlining operations and shedding non-core segments as it pivots toward cleaner energy services and integrated digital platforms. For Baker Hughes, retaining a 35% stake in SPC allows it to offload operational complexity while maintaining upside exposure to equipment demand in the Middle East.

For Cactus, the move follows its strategy of entering underserved international markets through asset-light platforms. The company has historically prioritized organic growth, but this deal reflects an evolution toward strategic M&A that aligns with shifting customer procurement models, which now favor end-to-end partnerships with capital-light, reliable suppliers.

Notably, the SPC business includes both original equipment manufacturing and aftermarket support—a mix increasingly favored by oil producers looking for lifetime value over upfront cost minimization. In this respect, SPC enhances Cactus’ competitive positioning not only in hardware but in services and long-term client contracts.

What Is the Role of SPC’s Operational Improvements?

In the past few years, the SPC business has undergone significant internal transformation. The leadership team implemented service facility rationalization and optimized the manufacturing footprint to improve profitability and reduce fixed costs. These efforts—combined with the legacy relationships and domain knowledge Cactus brings—are expected to accelerate further cost efficiencies post-acquisition.

Cactus CEO Scott Bender indirectly referenced this in the announcement, noting that the leadership team’s familiarity with the SPC assets and the supply chain presents immediate operational synergy opportunities. Additionally, the potential to integrate Cactus’ low-cost manufacturing infrastructure with SPC’s product suite is likely to create a more flexible, margin-optimized production model tailored for international demand.

What’s Next for Cactus and Its JV with Baker Hughes?

Once the transaction closes in the second half of 2025, integration will focus on operational alignment, customer account continuity, and administrative system migration. Baker Hughes is expected to support this process actively, ensuring that existing contracts and customer relationships are preserved during the transition period.

From a governance perspective, the joint venture structure provides Cactus operational leadership while benefiting from Baker Hughes’ brand equity and regional relationships. Over the medium term, analysts expect Cactus to evaluate additional international expansion opportunities and possibly consolidate the remaining 35% SPC stake if financial and strategic conditions are favorable.

With a strong cash position, growing backlog, and increased visibility across global markets, Cactus is now better positioned to weather oil price volatility and supply chain disruptions, while targeting consistent EBITDA and free cash flow growth.

Future Outlook: Can Cactus Scale as a Global Oilfield Equipment Leader?

This acquisition marks a turning point for Cactus as it shifts from a mid-cap U.S. equipment provider into a global player with a presence in one of the most strategically important oil and gas regions. While execution risks in cross-border joint ventures remain, the company’s deliberate deal structuring, robust balance sheet, and intimate familiarity with SPC operations provide a foundation for success.

Industry observers are watching closely for whether this sets off a second wave of mid-tier consolidation in the oilfield equipment space, particularly among firms trying to bridge the U.S.–MENA axis. As energy producers place longer bets on infrastructure-heavy projects in regions like the Middle East, Africa, and Southeast Asia, Cactus’ deal could become a blueprint for how capital-light U.S. manufacturers scale globally.

If integration proceeds smoothly and margin guidance is met or exceeded, investor appetite for further expansion could rise—placing Cactus among a rare cohort of oilfield equipment firms successfully navigating a global diversification strategy in a structurally transitioning sector.