Who's Driving This Train? Update On Halliburton - Baker Hughes -- April 9, 2016; Kansas Utility Up For Sale?

When one follows the story about the US government denying a merger between Baker Hughes and Halliburton, one needs to ask the question: who's driving that train?

From Bloomberg/Rigzone:

General Electric Co. could become one of the top players in the oil services and equipment industry if it decides to bid for Baker Hughes Inc.

A Justice Department lawsuit filed this week against Halliburton Co. to stop the merger of the world’s second- and third-largest oilfield service companies could soon put Baker Hughes back in play, with GE seen as the most likely bidder. Halliburton and Baker Hughes have said they plan to contest the government’s case, which could delay the timing of any future takeover offers. In December, GE was said to be exploring bids for various assets Halliburton was marketing in an attempt to secure antitrust approval for the deal.

"This is one way you could really accelerate yourself in the oil and gas industry," J. David Anderson, an analyst at Barclays Plc, said Thursday in a phone interview. "Buy Baker to fill in the gap and all of a sudden, you’re one of the more dominant oil service companies out there."

GE has expanded its oil and gas business in recent years through more than $10 billion in acquisitions, making it the company’s fourth-largest division. Yet, within the world of oilfield services and equipment manufacturing, the company ranks 11th, according to Tulsa, Oklahoma-based consultant Spears & Associates.

Among GE’s four largest business units in the oilfield sector, none rank larger than third for market share. A large acquisition would vault GE into the top tier. "If they buy Baker Hughes, they’re immediately in the top 3," Anderson said. "This is sort of the big missing piece." Melanie Kania, a spokeswoman for Baker Hughes, and David Lurie, a spokesman for GE, declined to comment.

I am really, really irritated with myself. Yesterday, on my bike ride home, I said to myself that with the Halliburton-Baker Hughes deal falling through, this is a huge opportunity for GE. Wow, I wish I had blogged that yesterday. My paid subscriptions would have surged. LOL. (For newbies: I don't have a subscription blog.)

More from the linked article:

Oil and gas has become central to GE as Chief Executive Officer Jeffrey Immelt focuses operations on industrial manufacturing. He is selling the bulk of GE’s finance arm and its home-appliances unit while expanding divisions making drilling equipment, gas turbines and jet engines.

With the oil market slumping, GE is likely to be opportunistic as it explores potential acquisitions, said Deane Dray, an analyst with RBC Capital Markets.

“They are interested, but they’re going to be very, very discerning on the valuation because they’re in the driver’s seat.”

GE has a budget target of about $10 billion for dealmaking in the next few years. While the company could go well over that for the right acquisition, a large purchase may be difficult for some investors to stomach since that could conflict with GE’s stock buyback plans, Dray said. Even small bolt-on deals could set up GE’s oilfield equipment-making unit to cash in on a return to industry growth in a couple years, Anderson said. Providing offshore services and equipment to the oil industry looks "dead" until about 2018, he said.

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Biggest Electric Utility In Kansas Up For Sale?

Bloomberg is reporting:

Westar Energy Inc., the biggest electric utility in Kansas, has drawn takeover interest from rival Ameren Corp. as well as an investor consortium that includes Borealis Infrastructure Management Inc. and the Canada Pension Plan Investment Board, according to people familiar with the matter.

Westar is working with Guggenheim Partners to field interest, the people said, asking not to be identified because the discussions aren’t public. Initial bids for the utility, which has a market value of about $7 billion, are due next week, they said.

Many, many story lines in the linked article.