General Electric Company (NYSE:GE) Oil & Gas division recently announced the completion of its merger with Baker Hughes (NYSE:BHI), making it the number 2 oil service provider in the world.
GE’s oil and gas division closed the merger deal with Baker Hughes on Monday morning and the deal itself was reportedly valued at $23 billion. The two firms also announced that the size of the conglomerate made it the second largest oil field services firm in the world. The deal is also expected to change the direction of both companies. The merger will have its headquarters in London and Houston.
“Look we’ve always said this is a complementary transaction, and we feel good about the two portfolios coming together and being additive to our customers. That being said, there are cost synergies,” stated Lorenzo Simonelli, the former CEO of GE’s oil and gas division and the new head of the conglomerate.
Both companies have a lot to offer to the merger
Simonelli also added that there will be a lot of benefits in terms of synergy between the two companies joining forces with GE offering its industrial computing power while Baker Hughes offers its expertise in oil. He also added that the conglomerate will have the capacity to expand into other areas of the oil and gas business. The merger will be traded publicly as BHGE and it will allow Baker Hughes to double to size of its workforce to 70,000 in 120 countries.
The merger will focus on four main areas:Digital Solutions, Oilfield Equipment,Oilfield Services and Turbomachinery & Process Solutions. The merger was unanimously approved my Baker Hughes shareholders on Friday. Investors were clearly optimistic about the deal because GE’s stock went up by 2 percent following the announcement of the merger on Monday. Baker Hughes stock surged by 5.8 percent on the last day of trading, thus signifying positive sentiments by the investors regarding the merger. Analysts are optimistic that the merger’s stock will experience positive growth.
GE stock closed the latest trading session on Tuesday at $27.35 after tanking by 0.36 percent compared to the value of the stock during the previous close.