Ending days of speculation by the industry, General Electric has finally announced its merger of its oil and gas business and the No. 3 oilfield services provider  Baker Hughes.

This announcement was made on Monday as expected and was based on GE banking on a recovery in oil prices.

Baker Hughes shareholders will receive 37.5 percent of the new company and receive a special one-time cash dividend of $17.50 per share and the new entity would be controlled by GE, under the terms of the agreement with it owning 62.5 percent of the new company.

4 cents to GE’s earnings per share by 2018 and 8 cents by 2020 is expected to be added by the deal, the companies said on Monday. The transaction is expected to close in mid-2017.

Due to opposition from regulators, Baker Hughes’s planned merger with bigger rival Halliburton fell through in May and the latest deal comes after that incident. When it was announced in November 2014, the earlier deal was valued at $34.6 billion.

The second-largest player in the oilfield services industry in terms of revenue after Schlumberger would be created by the combination of GE Oil & Gas and Baker Hughes.

After a near freeze in activity caused by a slump in oil prices that began mid-2014, and the GE-Baker Hughes deal comes at such a time. Trading near $50 a barrel, global oil prices have risen by a third this year.

The demand for the gear the company makes would take longer to recover, probably until after the first half of next year, GE said last week, even though it believed that the oil market had bottomed.

Accounting for 14 percent of the company’s total revenue in 2015 was GE’s oil and gas business, which makes blowout preventers, pumps and compressors used in exploration and production.

A variety of oilfield services, products, technology and systems is supplied by Baker Hughes.

“This transaction creates an industry leader, one that is ideally positioned to grow in any market,” GE Chief Executive Jeff Immelt said in a statement.

“Oil and gas customers demand more productive solutions. This can only be achieved through technical innovation and service execution, the hallmarks of GE and Baker Hughes.”

The CEO of the new company is slated to be Lorenzo Simonelli, chief executive and president of GE Oil & Gas. While Baker Hughes CEO Martin Craighead will be vice chairman, Immelt will be chairman of the new entity.

Baker Hughes shares were up 12 percent at $66.20 in premarket trading on Monday. The stock had closed at $54.55 on Thursday ahead of the Journal report.

GE’s shares were up 0.3 percent at $29.32 in light trading.

It was only last week that The Wall Street Journal first reported that the companies were in discussions and it was on Thursday last week that GE and Baker Hughes had said that they were in talks over potential partnerships.

(Adapted from Reuters & CNBC)