NEWS

General Electric Co. is in talks to merge its oil-and-gas business with Baker Hughes Inc., according to people familiar with the matter, a transaction that would dramatically reshape the industrial giant.

GE GE, +2.06% has approached the oil-field-services company about a deal, the people said, but details of the talks couldn’t be learned and they could break down before an agreement is reached.

A deal — which could be worth upward of $20 billion — could be structured such that GE combines the businesses and spins them into a new publicly traded company. Such a transaction would help the maker of jet engines and locomotives distance itself from the battered energy industry.

“We are in discussion with Baker Hughes on potential partnerships,” a GE spokeswoman said after The Wall Street Journal reported that GE was in talks to buy Baker Hughes BHI, +8.38% . “While nothing is concluded, none of these options include an outright purchase,” she added. Baker Hughes declined to comment.