Baker Hughes (BHI) & GE Electric Merger Gets ACCC Clearance

The proposed merger between Baker Hughes Incorporated BHI and General Electric Company GE has been cleared by The Australian Competition and Consumer Commission (ACCC).  

On Jun 12, the U.S. Justice Department approved the merger on the condition that General Electric will divest its GE Water business. The Australian regulators believe that the GE Water sale will ensure that the combined entity does not stifle competition in the market. It is to be noted that Baker Hughes and General Electric, through GE Water, are the potential suppliers of refinery process chemicals in Australia.

The companies also received merger authorization from the European Commission on May 31.

In Oct 2016, Baker Hughes and General Electric had signed an accord to form the world's second largest oilfield service player. Per the deal, the oil and gas business of General Electric will merge with Baker Hughes to create a new entity – "New" Baker Hughes – which will likely rake in combined revenues of $32 billion. The combined entity is expected to have operations in more than 120 countries.

Following the deal closure, expected by the middle of this year, shareholders of Baker Hughes will likely own 37.5% of the new firm and a one-time cash dividend of $17.50 per share.

With a broader scale of products, the combined entity will be able to compete better with oilfield service majors like Schlumberger Limited SLB and Halliburton Company HAL. Moreover, the entity will be in a better position to brave downturns in the energy market.

Presently, the business scenario for oilfield service companies is favorable as shale players are gathering on oil plays to gather more crude. We can also say that with more exploration and production activities, there would be more contracts for the oilfield service players for efficiently setting up the wells.

Houston, TX-based Baker Hughes is one of the major oilfield service companies in the world, providing an array of services in the oil and gas industry. The one-year pricing chart shows significant strength as reflected by the company's gain of 24.1% against almost 9% decline of the Zacks categorized Oil & Gas-Field Services industry.   

However, the company's earnings surprise history looks unimpressive with an average negative surprise of 13.48%.

As a result, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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General Electric Company GE: Free Stock Analysis Report
 
Baker Hughes Incorporated BHI: Free Stock Analysis Report
 
Schlumberger N.V. SLB: Free Stock Analysis Report
 
Halliburton Company HAL: Free Stock Analysis Report
 
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