The merger between GE and Baker Hughes' oil and gas businesses will create the world's No. 2 oilfield services provider. Fred Katayama reports.
General Electric is merging its oil and gas business with Baker Hughes, creating the world's second largest oilfield services provider. GE will own over sixty percent of the new publicly traded company, and Baker Hughes will own the rest. The new partnership will have combined revenue of $32 billion. That's more than that of oil services giant, Halliburton, and just behind market leader, Schlumberger. Reuters energy reporter, Jessica Resnick - Ault, says expect more deals in energy sector. (SOUNDBITE) JESSICA RESNICK - AULT, REUTERS ENERGY REPORTER, (ENGLISH) SAYING: "The idea that a deal has finally gotten done involving this very big player, Baker Highes, indicates that we're really at a point in the down cycle in oil where companies are ready to strike large deals." Resnick - Ault also says the deal is horizontally integrated, so it may not face the same scrutiny as the earlier, unsuccessful attempt by Halliburton to buy Baker Hughes. The deal comes at a time when North American oil and gas producers are putting rigs back to work. Global oil prices have risen by a third this year to nearly $50 a barrel.