Tue, Dec 14, 2010 - Page 10 News List

GE to bolster energy unit with Wellstream purchase

Bloomberg

General Electric Co agreed to buy Wellstream Holdings PLC, a UK-based oilfield services provider focused on Brazil, for £800 million (US$1.3 billion) in the company’s second purchase in the industry this year.

Wellstream’s stockholders will receive £0.786 a share, including a £0.6 special cash dividend, GE said yesterday in a statement, sweetening an offer of £0.755 that was rebuffed in October. The bid is 29.1 percent higher than Wellstream’s closing price on Sept. 20, the day prior to when the British company announced it had received approaches.

Buying Wellstream supports CEO Jeffrey Immelt’s strategy to build up GE’s industrial business while shrinking the finance unit as a source of sales and profit. He said in October that GE had about US$20 billion in discretionary cash to spend as he unlocks a war chest amassed over two years.

The acquisition will be added to the GE Oil & Gas unit. GE agreed to buy oil-field equipment maker Dresser Inc for about US$3 billion in October. The oil and gas unit is part of the GE Energy Infrastructure segment, a business Immelt has said he wants to expand. GE Energy Infrastructure provided US$37 billion of Fairfield, Connecticut-based’s US$157 billion in sales last year.

Wellstream, based in Newcastle Upon Tyne, England, reported sales last year of £386.1 million, with Brazil accounting for more than half that revenue, according to data compiled by Bloomberg.

The company’s products include pipelines and risers used in underwater oilfield operations. The shares rose 41 percent this year through Dec. 10 in London trading, buoyed by takeover speculation.

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