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