GE to Buy Wellstream for $1.3 Billion to Bolster Energy Unit

GE to Buy Wellstream for $1.3 Billion to Bolster Energy Unit ; General Electric Co. agreed to buy Wellstream Holdings Plc, a U.K.-based oilfield-services provider focused on Brazil, for 800 million pounds ($1.3 billion) in the company’s second purchase in the industry this year.

Wellstream’s stockholders will receive 786 pence a share, including a 6 pence special cash dividend, GE said today in a statement, sweetening an offer of 755 pence that was rebuffed in October. The bid is 29 percent higher than Wellstream’s closing price on Sept. 20, the day before the British company announced it had received approaches.

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

“Subsea growth will come from Brazil,” Claudi Santiago, chief executive officer of GE Oil & Gas, said in a telephone interview. “Brazil is one of many reasons” buying Wellstream made sense, he said.

Wellstream shares rose as much as 5.5 percent to 788 pence in London. They traded at 784.5 pence in 8:42 a.m. local time.

Brazil Operation

The acquisition will be added to the GE Oil & Gas unit. GE agreed to buy oil-field equipment maker Dresser Inc. for about $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 $37 billion of Fairfield, Connecticut-based’s $157 billion in 2009 sales.

Wellstream, based in Newcastle Upon Tyne, England, reported 2009 sales of 386.1 million pounds, 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 oil-field operations. Wellstream shares rose 41 percent this year through Dec. 10 in London trading, buoyed by takeover speculation ahead of today’s agreement.

With Dresser, GE added industrial valves and pumps to challenge companies such as Tyco International Ltd., Flowserve Corp. and Emerson Electric Co. Other energy-unit acquisitions this year included the waste-heat power generation business of closely held Calnetix Inc. for an undisclosed sum. Articel From http://www.bloomberg.com/news/2010-12-13/ge-to-buy-wellstream-for-780-pence-a-share-plus-special-dividend.html For the latest updates PRESS CTR + D or visit Stock Market news Today

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