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By Jason Stipp and Jeremy Glaser | 06-26-2014 12:00 PM

Moat-Building Mergers

Strategic deals at GE and Oracle will support their wide moats, while AbbVie aims for tax relief in its bid for Shire.

Jason Stipp: I'm Jason Stipp for Morningstar and welcome to The Friday Five: Morningstar's take on five stories from the market this week.

Joining me with the Friday Five is Morningstar markets editor Jeremy Glaser.

Jeremy, thanks for being here.

Jeremy Glaser: You're welcome Jason.

Stipp: Lots of M&A news this week. The first story: GE won the right to buy part of Alstom, a French company, and you say this is a good thing for GE.

Glaser: It is. They are going to pay about 12 billion euros to buy the power and grid business of Alstom. This deal has been in the works for a while, but it was looking a little bit shaky. The French government was having some reservations. There were some other bids from Siemens and others who maybe were going to get into the action. But finally, with the French government taking a pretty substantial stake in Alstom, the deal is going to go through.

This makes sense for GE, because it helps them focus on the core part of their industrial business, which is where their wide moat really comes from. They'll be able to have this big installed base from Alstom. They'll be able to sell services to it, something that they're very good at. Daniel Holland, our GE analyst, says that when you look at this deal and when you look at the fact that they're going to be spinning off that North American retail finance business pretty soon, it's clear that GE really is focused on this industrials segment, which is a good thing for the company and a good thing for shareholders over the long term.

Stipp: Over in the tech sector, Oracle is agreeing to buy Micros. You say that Oracle is paying up for this deal, but Micros is a solid business.

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