London (UPI) Dec 13, 2010
General Electric has agreed to spend $1.3 billion to purchase Wellstream Holdings, a British subsea pipeline manufacturer active in Brazil.
Wellstream shareholders would receive $12.20 a share, including a 6 cent special cash dividend, GE said in a statement Monday. The transaction, which the board of Wellstream intends to unanimously recommend to its shareholders, is expected to be finalized in the first quarter of 2011. A previous bid for Wellstream was turned down.
GE with the deal underscores its intent to shrink its finance unit GE Capital and instead expand the company's industrial business, with one focus being the oil and gas exploration sector. In October, GE agreed to purchase oil-field equipment maker Dresser for around $3 billion.
Wellstream, according to a GE statement a "high-tech player in the flexible pipeline segment within the subsea industry," generates most of its revenues in Brazil, where it has a pipeline factory. This makes Wellstream even more attractive to GE. A major emerging economy, Brazil has turned into one of the world's most dynamic economies when it comes to deep-water oil and gas exploration. Several oilfields have recently been discovered off its coastlines.
"Brazil is a key region for GE and the proposed acquisition of Wellstream, along with the expansion of our Jandira, Sao Paulo Oil & Gas plant and the planned 2012 opening of a new $100 million investment GE Global Research Center in Rio de Janeiro, demonstrates our long-term commitment to this fast-growing region," Claudi Santiago, the chief executive officer of the GE Oil & Gas unit, to which Wellstream would be added, said in a statement."The deal is at an attractive point in the industrial investment cycle and is the latest in a series of strategic acquisitions over the last decade that have helped GE Oil & Gas expand its portfolio across all segments of the oil and gas industry and deliver consistent growth and profitability."
By acquiring Wellstream, GE will "further extend its reach into the important floating production, storage and offloading offshore segment," the company added.
For the year ended Dec. 31, 2009, Wellstream, which has headquarters in Newcastle Upon Tyne, England, reported revenues of $602 million and a sales of $398 million as of Nov. 16.
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