Ladies and gentlemen, thank you for standing by. My name is Margo, and I'll be your conference operator today. I would like to welcome everyone to the conference call to discuss Baker Hughes' acquisition of CHART Industries. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Chase Mulvehill, Vice President of Investor Relations. Sir, you may begin.
Good morning, everyone, and thank you for joining our conference call to discuss this morning's announcement that we've entered into an agreement to acquire CHART Industries. Joining me today are Chairman and CEO Lorenzo Simonelli, Executive Vice President of Industrial and Energy Technology, Ganesh Ramaswamy, our CFO, Ahmed Moghal, and Jill Evanko, President and CEO of CHART Industries. We will also be using a presentation with our prepared remarks during this webcast, which can be found on our investor website. After the prepared remarks, we'll open it up for Q&A. I would like to remind everyone that this will include forward-looking statements. Any forward-looking statements that we make today are based on assumptions as of this date, and we undertake no obligation to update these statements as a result of new information or future events.
I would refer you to our SEC filings for a full review of all of those risks. With that, I will turn the call over to Lorenzo.
Thanks, Chase. Good morning, everyone, and thank you all for joining us. We're excited to be with everyone today to announce our acquisition of CHART Industries. This acquisition is a strong strategic fit and accelerates our vision to become a leading energy and industrial solutions provider. This transaction will transform our industrial and energy technology segment by expanding our capability to serve a broader range of energy and industrial applications. Together, we will sharpen our focus on the most attractive and resilient markets, combining our highly complementary product and technology portfolios to deliver value-added solutions for our customers. We also see meaningful opportunity to accelerate aftermarket growth by increasing attachment rates across CHART's installed base, extending our broad geographic footprint, and strong customer relationships.
In addition, we will deploy our digital capabilities, including our AI-enabled Cordon solutions and iCenter, to deepen digital penetration across their serviceable installed base and unlock higher margin recurring revenue streams. Finally, we expect this combination to deliver strong earnings accretion and returns while enhancing the overall growth and margin profile of Baker Hughes. Turning to slide five, I'd like to walk you through a summary of the transaction details. The transaction consideration is $210 per share in cash, which is equivalent to an enterprise value of $13.6 billion. This values CHART at approximately 9x that of consensus EBITDA on a fully synergized basis. CHART will become part of our IET segment, where our established business system provides the structure, discipline, and repeatability needed to integrate with speed and precision.
This gives us confidence in delivering $325 million in annualized cost synergies, as well as capturing the full strategic and financial benefits of the transaction. We are making this acquisition from a position of strength, taking advantage of our strong balance sheet, cash generation, and divestiture proceeds to advance our portfolio goals. We remain committed to maintaining our Single-A credit rating and will later take you through our plans to deleverage over the next 24 months. The transaction is accretive across all key metrics, and we expect to deliver double-digit EPS accretion in the first full calendar year after closing the transaction. It meets every element of our disciplined acquisition criteria, both strategically and financially. Turning to slide six, I'll provide a quick overview of CHART and why we believe it is a highly attractive addition to our portfolio.
CHART is a global leader in process technologies and equipment for gas and liquid molecule handling across a broad range of industrial and energy end markets, including LNG, data centers, power, metals and mining, and low-carbon solutions. With only 30% of revenues tied to oil and gas, CHART is predominantly exposed to high-growth industrial and sustainability-linked markets, supporting a more balanced portfolio aligned with long-term secular growth trends. CHART is a leader in heat exchanges, small-scale compression, and cryogenic equipment. Its global scale enables them to support large and complex energy and industrial projects, while also significantly enhancing the aftermarket and life cycle value of its offerings. CHART also has a strong financial profile, with $4.2 billion in revenue in 2024, a three-year organic revenue CAGR of 14%, and a 24% EBITDA margin.
On slide seven, you can see how this transaction represents a natural step in Baker Hughes' ongoing strategic portfolio transformation. Over the past five years, we have doubled our EBITDA, supported by an increasing contribution from our faster-growing IET segment, which now accounts for 48% of total revenues, up from 37%. When we began this journey, the company had a lower margin profile and greater exposure to upstream oil and gas spending. Fast forward five years, and today we have fundamentally improved how we operate, driving a 600 basis point margin expansion while shifting toward a more balanced and resilient revenue mix, with less relative exposure to the more cyclical upstream market. As part of the broader business transformation, we implemented a robust business system during this period that has enhanced productivity and accelerates our progress to be a leaner, more efficient company.
This disciplined operating model provides the structure and rigor to successfully integrate acquisitions of all sizes, including larger strategic transactions like this one. This transaction marks another important step in our strategic journey, realigning the portfolio to deliver customer value and strengthen returns, profitability, and growth, while shifting our mix towards the IET segment. As a result, it enhances earnings durability and expands our presence in high-growth markets. With the addition of CHART, we will be well positioned for the next phase of value creation, powered by a more strategically aligned portfolio and a foundation built for long-term sustainable growth. With that, I will turn the call over to Ganesh, who will explain how CHART aligns strategically with our IET segment.
Thank you, Lorenzo. Let us begin on slide nine. Lorenzo provided an update on the progress achieved during Horizon One. The IET segment has supported growth, margin expansion, and implementation of our business system, which is now in its third year of operation. The acquisition of CHART is a strong strategic fit with our IET segment. It will accelerate our shift towards industrial markets, double our presence to non-oil and gas segments, and reduce our exposure to the more cyclical upstream markets. The combination also expands IET's capabilities in key growth markets such as LNG, data centers, gas infrastructure, hydrogen, and CCUS by expanding our total addressable market and unlocking commercial synergies by offering customers value-added solutions. The breadth and diversity of the combined portfolio will allow us to unlock significant aftermarket potential, driven by higher attachment rates and enhanced penetration of our digital offerings across the total installed base.
This is not just about alignment; it's about accelerated value creation. The combined portfolio will be more industrial and less cyclical, positioning the company to deliver more resilient and consistent long-term performance. Turning to slide 10, we expect to significantly increase IET's total serviceable addressable market by creating new opportunities. We are broadening our reach beyond our core markets, which currently include upstream oil and gas, infrastructure, and LNG, as well as new energy and distributed power generation. CHART increases our exposure to general industrial and metals and mining sectors, where they hold a historic presence. Additionally, there are new and highly promising growth opportunities in emerging areas such as space, water treatment, and nuclear technologies. Together, we will be able to serve a significantly broader portion of the market and more effectively deliver value for customers.
Turning to slide 11, we are not just about expanding into new markets; we are also deepening our presence within high-growth sectors through the combination of complementary technologies across energy and industrial value chains. Baker Hughes provides differentiated solutions for rotating equipment, flow control, digital, and decarbonization. CHART complements this through its capabilities in air and gas handling, thermal management, and process technologies, effectively addressing gaps across core value chains. As a result, we are better positioned to meet a diverse set of customer needs with tailored solutions that reflect long-term industry trends and shifting market demands, thereby enhancing our presence in high-growth sectors such as LNG, data centers, and power generation. Next, on to slide 12, we focus on one of the most compelling opportunities enabled by this combination: data centers.
Data centers are a rapidly expanding vertical in the global economy and an area where this combination allows us to better serve our customers. Data centers consume significant amounts of energy. In order to maintain competitiveness in the sector, it is essential to ensure both a reliable and resilient power supply, as well as effective thermal management systems capable of addressing the substantial heat output from high-performance computing operations. This is exactly where Baker Hughes and CHART come together in a differentiated way. Baker Hughes provides turbines that deliver distributed power generation, while CHART supplies industrial chillers that help reject the heat from advanced compute environments, especially GPUs operating above 200 degrees Celsius. In addition, CHART brings cryogenic tanks for on-site storage. This is not only a complete solution; it's a more efficient one.
We can significantly lower energy intensity across the system by utilizing waste heat from turbine exhaust and chip-level thermal loads. This combination positions us to deliver differentiated, high-efficiency infrastructure solutions for one of the fastest-growing and most energy-intensive sectors of the economy. Beyond its significant growth potential, it positions us to play an expanded role in shaping what we believe will be one of the most transformative markets of the next decade. Now, turning to slide 13, I would like to talk about the significant aftermarket opportunity where we see a clear. By 2030, Baker Hughes's installed base is expanding by 20%, while CHART's installed base is increasing by 35%. This alone will drive accelerated installed base growth for Baker Hughes. There are also several complementary elements that position us to accelerate this growth profile for our aftermarket business.
First, we can extend our expansive service footprint and strong customer intimacy in regions like the Middle East and Asia-Pacific, where CHART has a large installed base but limited aftermarket service coverage. Second, we see the same opportunity to deploy Baker Hughes's service capabilities into underserved end markets such as metals and mining. Third, by integrating Baker Hughes's global service network and AI-driven platforms with CHART's digital tools, we can transform the customer experience across the full lifecycle of the combined installed base. For example, platforms like Baker Hughes's iCenter and CHART's Uptime enable proactive diagnostics and real-time asset monitoring, leading to smarter operations, increased uptime, and lower total cost of ownership. Together, we can transition from reactive service to predictive performance. In short, this combination unlocks significant aftermarket growth potential, further enhancing both the durability and quality of Baker Hughes's assortment.
Now, I would like to turn the call over to Ahmed, who will go through the financial details of the transaction.
Thank you, Ganesh. I'll start by reviewing in more detail the key financial components of the transaction on slide 15. As Lorenzo already noted, the transaction consideration is $210 per share in cash, representing an enterprise value of $13.6 billion and approximately 9x 2025 fully synergized EBITDA. There is no financing condition associated with this transaction, and we have obtained fully committed bridge financing, which we expect to replace through permanent debt issuance and cash on our balance sheet prior to close. We are committed to maintaining our Single-A credit rating and project that our net leverage will be 2.25x at closing, with a detailed plan to deleverage to 1x to 1.5x within 24 months following deal close. We have high confidence in achieving $325 million in annualized cost synergies over three years. We'll go into more details on how we plan to do that in a few moments.
We see the acquisition as accretive to margins and cash flow, with double-digit EPS accretion in the first full calendar year and double-digit return on invested capital by the fifth year post-close. We expect the transaction to close in mid-2026, subject to approval from regulatory authorities and CHART shareholders, as well as other customary conditions. On slide 16, you'll see how this transaction closely aligns with our established strategic and financial acquisition criteria. From a strategic perspective, the acquisition expands our offerings in core customer sectors while broadening our exposure to high-growth markets and strategic industrial segments like metals and mining. The acquisition of CHART contributes to expanding our recurring revenue base by increasing participation across the lifecycle. The acquisition is highly synergistic, leveraging our business system, commercial platforms, supply chain, and IT systems to drive accelerated value creation.
It also enhances the resilience of our earnings, broadening our exposure to secular growth markets across industrial and energy sectors, making us stronger through economic cycles. The transaction also meets our financial criteria, including margin accretion, revenue growth acceleration, free cash flow expansion, and exceeds our returns threshold. Moving to slide 17, we see a clear path to significant value creation for our customers and shareholders through cost and commercial revenue synergies. We have high confidence in our ability to achieve runway cost synergies totaling approximately $325 million through SG&A optimization, supply chain efficiencies, and facility optimization across the combined company. We also see meaningful commercial synergies. This includes opportunities for expanded market coverage and broader product offering, as well as higher attachment rates and enhanced digital penetration on CHART's installed base.
Alongside this, we're also strengthening our ability to address complex customer challenges through a more comprehensive set of capabilities. On slide 18, we highlight our defined path to reduce leverage to 1x to 1.5x within the first 24 months post-close. This will be driven by free cash flow generation, as well as proceeds from continued portfolio optimization actions, including the $1 billion of net proceeds expected from the recently announced transactions. The combined company will have access to a $3 billion revolving credit facility and about $3 billion in cash on our balance sheet on a combined company basis at close. On slide 19, you can see we are refining our capital allocation framework until we hit our targeted leverage ratio of 1x to 1.5x . We will continue investing in R&D across the combined portfolio as technology innovation remains central to the value proposition of both companies.
We're committed to maintaining our dividend and will retain flexibility on buybacks as we focus on reducing leverage. We're also targeting approximately $1 billion in additional proceeds from portfolio optimization, which is incremental to the $1 billion of net proceeds already noted. After achieving our target leverage, we will resume returning 60%-80% of free cash flow to shareholders. With that, let me now hand the call back over to Lorenzo.
Thank you, Ahmed. As we close out Horizon One, an important period defined by significant operational improvement, we are excited with the addition of CHART to our portfolio as we enter Horizon Two. CHART's complementary product and aftermarket service offerings help accelerate our portfolio transformation and significantly enhance our growth opportunities across both Horizons Two and Three. The enhanced industrial scale and product depth that CHART provides also helps Baker Hughes unlock additional portfolio hydrating opportunities across both the IET and OFSE segments. We expect this next phase of portfolio optimization to further enhance our margin profile while also deepening the connectivity between OFSE and IET. As we enter Horizon Two, we remain committed to operational execution while pursuing the expanded set of growth opportunities enabled by CHART. We will also remain disciplined in our approach to inorganic activity as we continue building the premier energy and industrial technology company.
In summary, the CHART acquisition transforms our IET segment and advances our strategy to build a leading energy and industrial company. It sharpens our focus on the most attractive and resilient energy and industrial markets, expands our capabilities through a highly complementary product and technology portfolio, and enhances our ability to deliver more differentiated solutions. It also strengthens our aftermarket services business, a key driver of recurring high-margin revenue, and is expected to deliver strong earnings accretion and returns. Overall, the transaction supports stronger growth and margin expansion that will further enhance the durability of Baker Hughes's earnings and cash flow. To employees of CHART, we are excited to welcome you to Baker Hughes. We have long admired your work, having collaborated on many successful projects to help take energy forward, and I believe that we can only be more successful together.
Today's announcement is a testament to the hard work and accomplishments of our 57,000 global Baker Hughes employees. We have undergone significant change to differentiate ourselves, transform the core, and consistently achieve the financial results that have enabled this acquisition. Thank you for your dedication. Together, we are building a stronger future for Baker Hughes. With that, I will turn the call over to Jill Evanko, President and CEO of CHART Industries, to provide further perspective on this important milestone.
Thank you, Lorenzo. Let me begin by sharing why I am genuinely excited about this combination. At CHART, we have long been committed to innovation as a catalyst for a better tomorrow, offering one of the most comprehensive portfolios in industrial gas and energy. Today marks a pivotal moment in our journey. The combination with Baker Hughes presents a highly attractive opportunity to build a truly differentiated energy and industrial company. To our shareholders, on behalf of our board and leadership team, I want to sincerely thank you for your continued trust and support. We believe this transaction represents a compelling outcome, delivering immediate and attractive value while aligning our business with a partner that shares our strategic visions and commitment to long-term value creation. To our customers, the strong partnerships we have built will continue to thrive.
Together, CHART and Baker Hughes will offer a broader suite of products and solutions and open new avenues for collaboration, innovation, and growth. To our committed, motivated team members, I want to close with a heartfelt message. As we have always said, people truly make the difference. I'm confident that this talented group of professionals will continue to drive meaningful change, advance our progress in the energy sector, and benefit from expanded opportunities through Baker Hughes's global reach. Thank you for bringing us to this momentous occasion. With that, I will turn back the call to Chase.
Operator, we can now open up for questions.
Thank you. At this time, if you would like to ask a question, please press the star one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. We do ask that you limit yourself to one question and one follow-up question. Once again, that is star one for a question. We'll take our first question from David Anderson with Barclays. Please go ahead.
Good morning, Lorenzo. It's certainly been a busy year for the Baker Hughes team.
Hi, Dave. How are you?
Oh, I'm doing well. You know, over the last several years and even this year, you've been shifting the Baker portfolio more into industrial energy. I totally understand the logic of acquiring CHART from that standpoint. I guess my question is, why now? Was it CHART finally getting past a major acquisition of its own and integrating housing, or was this more to do with what you see on Horizon Two and Three and where you can accelerate growth in certain end markets?
Yeah, Dave, thanks for the question. I think a couple of elements here on why CHART. I think, as you said, CHART's got a strong strategic fit. It accelerates our vision to become a leading energy and industrial solutions provider. When you look at the combined portfolio, we'll be more industrial and less cyclical, positions the company to deliver more resilient. It really accelerates our shift towards the industrial markets, doubling our exposure to non-oil and gas markets. As we look at CHART, we've been working alongside them for a number of years across many infrastructure projects. It aligns strategically with our IET segment, adding key thermal management, air and gas handling solutions into our portfolio.
The combination really expands IET's capabilities in key growth markets such as LNG, data centers, gas infrastructure, hydrogen, and CCUS, and really increases our addressable market while also unlocking commercial synergies and value-added customer solutions. The breadth and depth of the combined portfolio is going to also allow us to unlock a significant aftermarket potential. As we look at the products and services, highly complementary, and it also aligns with our strategy to provide lifecycle solutions to our customers across the most critical applications. I think it really positions Baker Hughes to be a technology leader. To the aspect of why now, I think as you look at Baker Hughes over the last few years, we've really created a foundation of execution, operational excellence, and that's a platform that allows us to acquire and integrate CHART Industries.
We've got a strong balance sheet, and we've got the conviction on the strategic fit and the opportunity to create value. Also, CHART itself has continued to improve performance, has integrated Howden, and we see this as the launchpad for going forward. Really, right time and the right company, the right strategic fit.
That makes a lot of sense, Lorenzo. With apologies to Jill, I think it's fair to say that execution has been a bit of a soft spot at CHART in recent years. Things were definitely starting to turn the corner. I was wondering if you could talk about some of the opportunities to improve on the operational side. You obviously have quite a bit of experience with the GE Baker Hughes merger, so I was just hoping to get some early thoughts on how you plan to approach that. You had just sort of described how you have this kind of better platform. Could you just expand a little bit on that, on how you pull that in, how you improve operationally there?
Yeah, Dave, I'm very pleased with the fact that we've created a foundation. I'm going to let Ganesh talk to the business system that IET has in place, the success that also IET has had over the course of the last three years on improving its margin rate. Again, towards that goal that we set out of 20% EBITDA that's achieved in 2026. Ganesh, over to you.
Thank you, Lorenzo. Dave, thanks for the question. As we have shared with you in our most recent earnings call, our business system is now in its third year of operation. What we have done over this time period is to expand our operational capabilities in a systematic and structured way, which has resulted in executing segment performance with speed and consistency. What we plan to do is to operate CHART as a standalone business unit within the IET segment, maintaining its own P&L, leadership team, and commercial focus to minimize any disruption in customer relationships and performance accountability. By embedding our business system that we have evolved over the last three years, we will be extracting the synergies. As the synergies are extracted and operating disciplines are properly embedded through the principles of the business system, we will evaluate further structural integration as appropriate.
Overall, we feel very confident that with the systematic and structured capabilities that we have built so far, we can expand and extend that to CHART and leverage the synergies and also realize the performance aspirations that we are looking for from this transaction.
Much appreciated. Thank you.
Thank you. Next, we'll go to Arun Jayaram with JPMorgan. Please go ahead.
Good morning, gentlemen. I was wondering if we could start with commercial synergy opportunities. I know the market has maybe been reticent to give credit for commercial synergy capture on day one, but Lorenzo, Ahmed, I was wondering if you could talk about opportunities, maybe tangible opportunities and maybe some blue sky thoughts on commercial synergies.
Arun, I will take that on behalf of Lorenzo [and] Ahmed here. We see CHART offering a very strong strategic fit with IET. As we said earlier, it accelerates IET's shift towards industrial markets. It doubles our presence in non-oil and gas markets. It not only expands our addressable market, both in terms of the markets we currently participate in, but also as well as new markets such as metals and mining that we talked about. In addition to the market expansion, we also see the opportunity to deepen market presence in areas like data centers that I shared with you earlier, that are similar examples in new energy, LNG, water treatment, nuclear, and CCUS, by offering enhanced value propositions by utilizing our combined capabilities.
Now, to be clear, the financial metrics that we measured today do not include any revenue synergies, but we are really looking forward to extracting these revenue synergies over time that we talked about.
Okay. My follow-up is on the cost synergy front. You've outlined $325 million of synergies in three years, SG&A, supply chain, and facility optimization. Could you talk about just your confidence to achieve this and maybe some upside potential from what you see today?
Yeah. Hey, Arjun Ahmed. I'd say, look, first and foremost, we're really confident in the $325 million of cost synergies that we've identified through our team. As you look at the linearity of that, as we laid out, we expect to achieve just under $100 million by the end- of- year one and then $200 million by end-of-year two and run rating to close to $325 million by the out year. As you break it down between the three elements, we think about it as SG&A optimization, which is about 50% of that target. This is simplistically, as Ganesh laid out, just going out and executing IET business system to CHART, efficiency gains, looking at redundant corporate and standalone public company costs. Everything that you would expect us to go out and achieve fairly efficiently. We will do that. The other piece is around supply chain.
This is on the basis of our very strong global supply chain footprint combined with CHART. This would be in areas you think about procurement of raw engineered components, commodities, looking at transportation and freight alongside an efficient manufacturing footprint. From a facility optimization standpoint, which makes up the balance of that, this is really looking at optimizing our manufacturing footprint locations where there are multiple Baker Hughes and CHART facilities around the world. Also making sure we can utilize that as we go into some of those new locations and markets and penetration that Ganesh highlighted. Overall, we feel very confident on delivering this, especially through the rigor of the business system that Ganesh talked about is in year three of operation.
Great. Thanks.
Thank you.
We'll next go to Scott Gruber with Citigroup. Please go ahead.
Yes. Good morning and congrats to everybody on the deal. I wanted to ask about the billion dollars of future portfolio optimization actions. Is that likely comprised of one or two larger transactions or a series of smaller transactions? Do you think the divestitures will be more focused on the OFSE side versus the IET side or spread across both segments?
Yeah, Scott, hope you're well. Again, as you look at the billion dollars, I think before we get into that, it's important to remember that we've continuously looked at Baker Hughes from a portfolio perspective of seeing how we transform and how we continue to evolve in hydrating the portfolio. We've been doing that since 2017 with puts and takes. You can look at the acquisitions that we've made of Quest Integrity, BRUSH, also Altus, as well as the dispositions that we've made. Most recently, as you saw, also the transactions that we announced in the second quarter. We'll continuously keep on looking at the way in which we hydrate the portfolio. The two segments are comprised of 30+ businesses all competing for capital.
What we're remaining focused on is making sure we've got the resources in the strong margin profile areas where the recurring revenue potential, long-term growth opportunities, and make sure that we retain the most competitive portfolio as we go forward. That's something that we do on a continuous basis and will continue. It's really not OFSE or IET, it's total Baker Hughes and the process that we undertake all the time.
I appreciate the color. And then just a quick clarification question on the integration strategy. Ganesh mentioned CHART operating as a standalone within IET, and then you'll apply your business systems and extract the synergies. Is that strategy just kind of a lower risk strategy for the initial integration down the road? Do you eventually pursue a full integration? Just some additional color there would be great.
Yes, Scott. Again, as I said earlier, we will run CHART as a standalone business unit within IET while we systematically extract the synergies that we are referring to in a predictable manner. Post, as we go through this over the next 2+ years, as synergies are extracted and the operating disciplines are properly embedded through our business system, we will then evaluate further structural integration as appropriate. Anything we do will be gradual and harmonized. This approach, to be very clear, does not conflict with the execution of our synergies.
Okay. I got it. Thanks for the clarification. Thank you.
Thank you.
Thanks.
Thank you. Next, we'll go to Saurabh Pant with Bank of America. Please go ahead.
Hi. Good morning, Lorenzo.
Morning, Saurabh.
Lorenzo, maybe Jill, you may want to chip in as well and maybe Ganesh you as well. I want to just touch on the aftermarket side of things a little bit. And Lorenzo, you've been clear in your strategy, right, that you want more life cycle revenues, and you want more aftermarket businesses. So this acquisition definitely checks that box. But if we look at slide 13 in your deck, you're talking about the mid-single digit on the Baker side. I think Jill has talked about high- single digit, close to 10%. So if we look at that mid-single digit plus-plus, I know you've got some drivers on the right, but maybe help us walk through that. Which of those drivers are going to be most significant? Which are the low-hanging fruits? And how should we think about that aftermarket business progression?
Sure. Saurabh, good to hear from you. As we mentioned, the Baker installed base is going to grow by 20% by the end of the decade. We have a clear line of sight. The CHART installed base is going to grow by 35% during the same time period. We see an accretive impact coming from the expansion of the installed base just from the math, as we can see. Now, in terms of how the combined capabilities are coming together, there is a tremendous potential here to increase value in aftermarket services by boosting our service attach rates and enhancing our customer experience through multiple areas. Number one, serving underserved geographies, for example, the CHART installed base in the Middle East and Asia-Pacific by expanding the Baker infrastructure, the IET infrastructure there.
Also, in end markets such as metals and mining, there is a need for, there is an opportunity for expanding IET service infrastructure in those end markets. Digital solutions that Lorenzo mentioned earlier in his opening remarks on expanding the potential of Cordon solutions, our iCenter capabilities, along with CHART's Uptime digital tools, bringing all of these together would enhance complementing value propositions for our customers. That is the basis for expanding attach rates into the numbers, into the ranges that we are referring to on slide 13.
I got it. That's all from Ganesh. Maybe I've got a quick follow-up, Ahmed, for you on the capital allocation framework. Now you are rightly allocating more cash towards deleveraging, but on buybacks, I know you talked about being flexible on buybacks. How should we think about buybacks, Ahmed, from now until you get to your leverage, your target of 1x to 1.5x ?
Yeah, Saurabh. Look, as you rightly said, and we've highlighted, our immediate priority is going to be to delever the balance sheet. We're committed to maintaining our Single-A credit rating and maintaining the strength of the balance sheet that's allowed us to get to this point. As you saw, we have a pretty detailed plan to take leverage down within the next 24 months post-close from that leverage of 2.25 to 1- 1.5. The first priority for us is going to be making sure we maintain the dividend and continue that organic technology investment, whether it's aftermarket, the pure R&D. We want to make sure that continues at a good pace and we reinvest into the business. That organic combination with the dividend is very critical for us. As for buybacks, we'll remain flexible until the leverage is reduced to that target range.
From an earnings accretion standpoint from this deal, we feel like this is the right area to allocate capital and delever as we go through it. The other piece for us is going to be making sure that deleveraging is supported by that portfolio optimization that we laid out, the billion dollars of incremental optimization that will continue to drive. Once we reach that target range of 1- 1.5 of leverage, we'll resume returning to that 60%-80% of free cash flow to shareholders, which we've laid out before through a combination of dividends, which, of course, we also want to grow alongside the earnings power of the company. Then we'll continue also on the buyback strategy to make sure we are within that 60%-80%.
I got it. Okay, Ahmed, thank you. I'll turn it back.
Thanks, Saurabh.
Thank you. Next, we'll go to Stephen Gengaro with Stifel. Please go ahead.
Thanks. Good morning, everybody. I think the first thing, Lorenzo, if you might be able to address, when we look at the next shift, I mean, based on my math, IET becomes close to 2/3 of EBITDA maybe next year. Can you just touch on sort of your thoughts around the long-term plans for the legacy Baker Hughes oil service businesses?
Yeah, definitely, Steven. We are creating an energy and industrial technology company, and we've stated that for some time across the three Horizons that we've laid out as our strategy. We firmly believe that Baker Hughes is stronger together as one company. As you think about it from a portfolio standpoint, the franchise has the breadth to reach and address the needs of the constantly evolving energy ecosystem and the customer base. If you consider key themes in the industry today, such as decarbonization, digitization, electrification, we are now very well positioned to provide holistic solutions in the areas across OFSE, IET, and CHART Industries helps add to that. As we've spoken about before, we see increasing opportunities for synergies across the two segments. We've got a long pipeline of enterprise-wide opportunities, which continues to grow as also the energy ecosystem continues to grow around the macro themes.
A good example is we've provided in the past the subsurface CCUS, as well as the NovaLT IET gas turbines, hydrogen-ready, that we're providing to Frontier for data center solutions, which we spoke about during our earnings, as well as then other areas like CCUS, geothermal, mining. As we think about the breadth of also CHART Industries and industrial energy technology, we'll be able to drive additional value for our customers. I'd remind you, if you think about our top 20 customers, 70% of our revenues are generated across both segments from those top 20 customers. OFSE remains a key part of our equity story. We don't think separation now or in the future is beneficial to drive shareholder value accretion given the synergies and growing commercial opportunities to drive value through the commercial alignment across the total enterprise in the two segments.
Great. Thank you, Lorenzo. Just as a follow-up, when we think about what's embedded in your IET segment and the technology at CHART Industries, have you thought much about sort of the technology innovations that could stem from putting those two businesses and capabilities together?
[Stephen], this is Ganesh. Let me answer that. As you know, we see technology innovation as a critical element in enhancing customer value proposition. We have a history of doing that at Baker Hughes. Then we've shared earlier, there are several examples where the combined technological capabilities in both the Baker side and the CHART side, it can come together and enhance value propositions. We talked about the data center example earlier, where Baker's rotating equipment capabilities and CHART's thermal management capabilities can deliver outcomes with vastly improved efficiencies for our customers. There are similar examples across other areas, metals and mining, for example, nuclear, CCUS, gas infrastructure, water treatment, LNG, where the combination of capabilities across both of the companies will lead to enhanced value proposition in terms of performance, in terms of efficiency, and also in terms of customer outcomes, most importantly. We are very excited by that.
Great. Thank you, Ganesh.
This concludes our question-and-answer portion. I would now like to turn the call back over to Lorenzo Simonelli for closing remarks. Please go ahead.
Thank you very much. I know it's a busy day, so thanks to all for joining us. We're really excited about today's announcement, which marks an important step forward in Baker Hughes' strategy. We're confident this transaction strengthens our long-term positioning, enhances value creation, and drives sustainable earnings growth. We look forward to sharing more details and working closely with our customers, employees, and shareholders as we move toward closing. Operator, you may now close out the call.
Thank you. This does conclude today's conference. We appreciate your participation. You may have a wonderful day.