GE to buy Well­stream for $1.3 bil­lion to bol­ster en­ergy unit

The Pak Banker - - Company& -

LONDON: 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, Bloomberg re­ported.

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.

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.

More­over, Gen­eral Elec­tric Co. (GE) may tap the Is­lamic bond mar­ket again in "the near fu­ture," af­ter the com­pany last year be­came the first U.S. cor­po­rate to is­sue a sukuk, GE's pres­i­dent for the Mid­dle East and Africa said Mon­day.

"We were very ex­cited about that is­sue, I think it was very suc­cess­ful," Na­bil Habayeb, who is also GE's chief ex­ec­u­tive of­fi­cer for the re­gion, said at a press con­fer­ence. "We will be look­ing at an­other set in the near fu­ture."

GE Cap­i­tal, the com­pany's fi­nan­cial arm, sold $500 mil­lion in sukuk in Novem­ber last year for gen­eral cor­po­rate fund­ing, and said it in­tends to be a reg­u­lar is­suer in the sukuk mar­ket.

"Ev­ery­body's get­ting into Is­lamic fi­nanc­ing," Habayeb told Zawya Dow Jones on the side­lines of the event. "It's at­trac­tive, es­pe­cially in this re­gion."

GE be­gan ex­pand­ing in the Mid­dle East about five years ago, grow­ing its rev­enue from the re­gion to $6.4 bil­lion in 2009 from $1.5 bil­lion in 2004. It has more than dou­bled its staff in the re­gion to 2000 peo­ple since then.

Rev­enues from the Mid­dle East of $6.4 bil­lion, from GE's in­dus­trial busi­ness in the re­gion, com­pares to about $90 bil­lion in in­dus­trial rev­enue glob­ally, Habayeb said.

More­over, Re­ported on 10th of De­cem­ber that the board of di­rec­tors of Gen­eral Elec­tric Com­pany NYSE:GE has ap­proved an in­cre­ment in the com­pany's quar­terly div­i­dends up to 17% on its com­mon stock. Af­ter this ap­proval the div­i­dend the cur­rent com­mon stock div­i­dend of $0.12 per out­stand­ing share would in­crease to $0.14 per out­stand­ing share of GE. The board de­clared this div­i­dend to be paid on Jan­uary 25, 2011 to the share­hold­ers of record of De­cem­ber 27, 2010.

Com­pany's CEO Jeff Im­melt said that this sec­ond time div­i­dend in­cre­ment in one year was ini­ti­ated af­ter the con­tin­u­ous strong cash gen­er­a­tion, speedy re­cov­ery at GE cap­i­tal and growth in in­dus­trial busi­ness through year-end 2010.

Gen­eral Elec­tric Com­pany (GE) is a di­ver­si­fied technology, me­dia and fi­nan­cial ser­vices com­pany. The Com­pany's prod­ucts and ser­vices in­clude air­craft en­gines, power gen­er­a­tion, wa­ter pro­cess­ing, se­cu­rity technology, med­i­cal imag­ing, busi­ness and con­sumer fi­nanc­ing, me­dia con­tent and in­dus­trial prod­ucts.

The Com­pany serves cus­tomers in more than 100 coun­tries. The Com­pany op­er­ates through five seg­ments: En­ergy In­fra­struc­ture, Technology In­fra­struc­ture, NBC Uni­ver­sal (NBCU), Cap­i­tal Fi­nance and Con­sumer & In­dus­trial. In Septem­ber 2009, the Com­pany sold its 81% in­ter­est in Home­land Pro­tec­tion busi­ness to Safran SA. In Septem­ber 2009, the Com­pany acquired ScanWind. -PB News

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