General Electric (GE) - Get Report has finally found a partner for its oil services business, announcing plans Monday to combine its energy business with Baker Hughes (BHI) in a deal that would create a $32 billion-sales oilfield services giant.

Terms of the deal call for Boston-based GE to contribute its oil and gas operations and $7.4 billion in cash to the combination, which will be 62.5% owned by GE and continue to trade publicly. The cash will fund a special $17.50 per share dividend to Baker Hughes holders, who will also retain a 37.5% share of the combination.

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The deal comes just months after Houston-based Baker Hughes and Halliburton (HAL) - Get Report walked away from their planned $28 billion combination due to antitrust concerns. Prior to the May abandonment GE had been in talks to acquire some Baker Hughes assets to be divested had the deal been approved, but instead will now join forces with the entire company.

GE under CEO Jeffrey Immelt has worked to pare down the sprawling conglomerate and focus its resources on areas where it has a commanding marketshare and expectations for growth. Though the company has been focused on energy -- for example buying the power business of Alstom last year for $10 billion -- the oil and gas business had stumbled. Citigroup analysts Scott Gruber and Andrew Kaplowitz said in a note last week that the company is "heavy on equipment and light on service," and "has yet to become a full-fledged competitor to the major oil services companies."

The Baker Hughes combination should solve those issues, vastly expanding GE's services business and catapulting it from just outside of the top 10 in services to a top competitor. Immelt, in a statement, said the deal "creates an industry leader, one that is ideally positioned to grow in any market" backed with GE's technical expertise and balance sheet.

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"As we go forward, this transaction accelerates our capability to extend the digital framework to the oil and gas industry," Immelt said. "An oilfield service platform is essential to deliver digitally enabled offerings to our customers."

Post-deal the combination would have $32 billion in sales spread across drilling, completions, production, midstream and downstream equipment and services, creating what the companies said would be the second-largest oilfield equipment and services vendor. The company would have operations in more than 120 countries, and expects to generate total runrate synergies of upwards of $1.6 billion by 2020.

GE said the transaction should add about 4 cents to 2018 earnings per share and 8 cents by 2020.

Importantly, the structure of the deal should leave GE with balance sheet flexibility should other opportunities arise. Barclays analyst Scott R. Davis in a note last week said that GE is believed to have about $20 billion in buying power and a shopping list that includes targets in the automation, aerospace and energy sectors.

The company could be interested in beefing up its aerospace electronics and avionics portfolio, or could try to expand its aircraft engine component production. Last week GE committed €549 million ($599 million) to acquire 3-D printing firm Concept Laser, a maker of metal components for aerospace and other end markets.

For Baker Hughes shareholders, the deal offers an immediate payout in the form of the special dividend as well as exposure to a stronger balance sheet and a more diversified portfolio that should be better-suited to weather the energy cycle. Chairman and CEO Martin Craighead, in a statement, said that "the new company will be an industry leader, well positioned to compete in the oil and gas industry while pushing the boundaries of innovation for our customers."

At closing Immelt would serve as chairman of Baker Hughes, with GE Oil & Gas CEO Lorenzo Simonelli serving as chief executive and Craighead becoming vice chairman of the board. The post-deal Baker Hughes will have dual headquarters in Houston and London and a board that will consist of nine directors, with five appointed by GE.

—David Marcus contributed to this report.