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

Baker Hughes Incorporated BHI shares are trading mostly flat on Monday and General Electric Company 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. SLB.

Disclosure: The author is long SLB and BHI.