GE Deals for UK Oil Pipemaker

Monday, December 13, 2010 @ 12:12 PM gHale

General Electric Co. will pay $1.3 billion (£800 million) to pick up British oil drilling pipemaker Wellstream Holdings Plc.
The agreement is the latest in a series by the largest U.S. conglomerate to boost its presence in the oil services sector and shows that, despite the BP disaster in the Gulf of Mexico this summer, the industry expects deepwater drilling to continue.
Wellstream is one of only three main manufacturers of flexible “riser” pipes, which connect drilling rigs to well-heads on the sea floor.
The acquisition would also give GE a stronger footing in Brazil, where Wellstream has a manufacturing plant. In the oil industry, Brazil is making news of late as researchers made discoveries of multibillion barrels of oil discoveries in deep waters offshore. These areas are traditionally expensive for oil producers and provide a major opportunity for equipment makers.
This move is part of GE’s plan to spend up to $30 billion on takeovers. One of the focuses of the takeover is in the heavy manufacturing area.
Energy will be a major area of focus for the company, the world’s largest maker of jet engines and electric turbines, said GE Chief Executive Jeff Immelt.
Energy services has been one of GE’s fastest growing divisions, partly because of acquisitions. In October, GE reached a $3 billion deal to buy Dresser Inc, a maker of gas engines used to power oil and natural gas production equipment.
The deal should close in the first quarter next year.

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