Shares of Ensco (ESV) are down about 2% Tuesday, while Atwood Oceanics (ATW) is up 27% following Ensco's decision to purchase the company for $10.72 per share in an all-stock deal.

Consolidation in the oil space has been long awaited, TheStreet's Jim Cramer, manager of the Action Alerts PLUS portfolio, said on CNBC's "Stop Trading" segment. 

Admittedly, this deal is quite small, with Atwood sporting a market cap of about $825 million after the move higher. It's not clear if the Ensco-Atwood deal will lead to more M&A deals down the line, Cramer said.

But at this point, it's "join or die," he said for many in the energy space, particularly in offshore drilling. There's too many companies and not enough business to go around. Companies are forced to buy others for more business.

Look at Ensco. Three years ago shares were above $50 with a hefty yield. Now the stock is below $7 and has a minuscule dividend payout. It's down 86% over the past five years and its offshore operations are struggling as it costs too much to extract oil from the ocean.

The offshore industry has been crushed and it's unclear if Atwood will help. But there's few choices left for the struggling group, he concluded. 

At the time of publication, Cramer's Action Alerts PLUS had no position in any companies mentioned.