General Electric Company is currently struggling for the leadership in the oil equipment sector of the US economy. Regardless of the fact that the company has been considered one of the leaders in the industry for years (although, they have not ranked first), the situation may ultimately change in the nearest future. This can happen in case the lawsuit filed to the US Justice Department with the intention to prevent the merge of the two most popular oil production companies in the world will be a success. The companies that are meant here are Halliburton Co. and Baker Hughes Inc. If the court adopts the decision to stop the pre-planned merger of these companies, General Electric Co. may take leadership in the oil production and extraction business as well as in the oil equipment US industry in general by the acquisition of Baker Hughes. The two companies concerned state that they are currently planning to contest the case of the government. This is done to delay the timing, the court decision and the potential takeover offers in future. This information has recently been reported by Bloomberg and has already become the topic of hot discussions nowadays.
What is the GE Position in the Case?
The goal of General Electric is to take control over Baker Hughes. According to the opinion of the experts, such an impressive acquisition will help the company get into the top tier of the oil industry magnates. The representatives of Tulsa, Oklahoma-based consultant Spears & Associates, GE still ranks 11 in the sector of equipment manufacturing and oilfield services. Although, they have managed to expand their oil and gas business over the previous years and even acquired over $10 billion, the reputation and profitability of the company leave much to be desired these days. In this situation, the purchase of Baker Hughes may become that very step, which will be the sort of the missing puzzle, which can include the company into three top oil production companies in the United States of America.
What’s Happening in the US Oil Industry Today and How Exactly Can GE Contribute to the Development of the Industry?
So, what exactly is happening in the oil industry of the United States nowadays and what are the chances for General Electric to change the situation for the better? According to Jeffrey Immelt, the Chief Executive Officer of the GE, gas and oil issues are a priority for the company nowadays. The fact that they have start selling the prevailing amount of the company’s finance arms in order to expand the divisions responsible for drilling operations and equipment, is another proof of the fact that GE urgently needs to take control over the Baker Hughes assets to improve the current situation and remain the leaders in the industry in the future.
As of today, General Electric has about $10 billion that will be enough to make successful deal in the nearest future. Speaking about the long-term perspective, the on-time acquisition of Baker Hughes will become a superb investment into the development of the company and their role in the oil and gas sector of the country.
According to Scott Davis, an industrial-company analyst, the timing of the deal may be somewhat slowed by the financial problems and obligations of the General Electric Company. It turned out that they have agreed to sell over $160 billion of their assets last year. Nowadays, however, the representatives of the company have filed an application to the regulators of the United States with the request to decline the resignation that may be associated with the increased financial risks. This is the only way for the company to make a larger and a more profitable deal with Baker Hughes. Taking into account the current improvement of the financial Baker Hughes situation (which may also be timely, of course), the deal may never take place if not managed in the nearest future. This is especially true if the merger agreement of the company with Halliburton will eventually take place.
About General Electric
General Electric (GE) is one of the major US multi-industry corporations, the foundation of which dates back to 1878, when the company was created by Thomas Edison. Nowadays, it is the world’s largest manufacturer of many kinds of equipment, including power units，drilling machines, nuclear power reactors, aviation engines, gas turbines, lighting and medical equipment and more. The company is one of the largest public corporations in the world, which is currently headquartered in the city of Fairfield (Connecticut, USA).
About Baker Hughes
Baker Hughes is one of the top companies that provides effective solutions to help gas and oil operators exploit their reservoirs in the most effective way. The company has years of experience in the business, thousands of satisfied customers and dozens of world-known business partners across the globe. They can boast a large network of offices in more than 80 countries of the world with about 45000 employees working for the benefit of the company. They are dedicated to the production of chemicals, fluids and next-generation products and services for oil and gas drilling operations.
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