Tuesday, December 20, 2016

General Electric Company, Baker Hughes and Oil Prices

General Electric Company's oil and gas division and Baker Hughes Incorporated's  management held an investor meeting recently to outline the rationale for their merger, which was announced back in October. As with the acquisition of Alstom's energy assets, GE management expects most of the synergies to come from cost rather than revenue. As such, it's tempting to think of the merger as creating a company set to generate earnings growth largely irrespective of the oil cycle.
Let's look at the cases for and against this argument.


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