Jim Cramer: We've Got A Very Good Rival To Schlumberger

Baker Hughes Incorporated (NYSE: BHI) shares are trading mostly flat on Monday and General Electric Company (NYSE: GE) shares are up 1.3 percent after the companies officially announced they will be merging their oil & gas business and creating a new oil services giant that will generate roughly $32 billion in annual revenue.

Shares of both GE and Baker Hughes have been performing well since reports of a deal between the two began surfacing late last week. In the past five trading sessions, GE stock is up more than 2 percent, while Baker Hughes has spiked 13 percent.

If Jim Cramer is correct, the deal could be one of the rare times that an M&A agreement is good news for both companies.

"I have felt that GE had kind of an asset-light approach, solutions approach, basically saying listen, when you drill, we can save costs. And then you take a premier drilling service company like Baker Hughes and you merge the two, and suddenly you get a very good rival to Schlumberger," Cramer said on CNBC Monday morning.

If the deal is approved by shareholders and regulators, the new company would be the second-largest oil services company in the world, behind only Schlumberger Limited. (NYSE: SLB).

Disclosure: The author is long SLB and BHI.

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