This post is written by Callum Lo, Integer Investments analyst.
Introduction
In the past few weeks, we have written three articles canvassing General Electric (NYSE:GE). The first article dealt with global oil trends, and argued that global oil demand is a key factor in GE's outlook because it indicates the volume of oil that requires GE's products for refining, transportation and processing. The second article examined GE's cloud-based industrial analytics platform Predix, and looked at how network effects place it in a uniquely competitive position.
The final article dealt directly with the issue at hand here, the GE-Baker Hughes merger. We examined regulatory issues, and explored potential barriers to regulatory approval. The article also examined whether the deal could create value for both firms, and concluded that the potential exists, but was by no means certain. Two of the concerns raised in the article may have been resolved by the recent EU decision. The first is a concern from regulators that there is too much overlap between the firms. The second is the possibility that vertical integration could lead to an unfair advantage up and down the supply chain through preferential treatment. The recent regulatory decision is a strong indicator that these concerns will not stick, and makes the deal very likely to succeed.
