By Joshua Mann, Denver Business Journal |
The new company to be formed by oilfield-services giant Baker Hughes Inc., which is active in Colorado, and (NYSE: BHI) and General Electric Co.’s oil and gas business will be “a new leader in the oil and gas industry,” GE Oil & Gas CEO Lorenzo Simonelli says.
“I’m very excited about our prospects with this combination,” Simonelli said in a conference call about the deal Monday shortly after it was announced.
The deal between Houston-based Baker Hughes (NYSE: BHI) and industrial giant GE (NYSE: GE) comes amid a slew of other acquisitions in the oil and gas sector, with analysts and executives pointing to an expected oil recovery as a catalyst for the deals. This one didn’t break from that pattern.
“This is the right time in the cycle to invest,” GE CEO Jeff Immelt said on the conference call. “We’ve assumed that oil has a modest recovery in ’17.”
Even if a modest recovery doesn’t happen, though, the deal still leaves GE better off than if the businesses hadn’t merged, Immelt said.
From a workforce perspective, the deal probably won’t mean as much contraction as might be expected, said analyst Fadel Gheit, a managing director with Oppenheimer & Co.
“I don’t think there is more fat to be squeezed out,” Gheit said. “The intention here is not to lay off more people.”