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GE rebuffed in $1.2 bn bid for Wellstream

GE rebuffed in $1.2 bn bid for Wellstream
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First Published: Wed, Oct 06 2010. 07 09 PM IST
Updated: Wed, Oct 06 2010. 07 09 PM IST
London/Boston: General Electric Co was spurned in one of its largest recent efforts to build up its industrial businesses, when British oilfield services Wellstream Holdings Plc rejected a $1.2 billion (£755 million) takeover approach.
News of Wellstream’s rejection came on the same day GE said it would buy Dresser Inc, a maker of gas engines used to power oil and natural gas production equipment, for $3 billion.
The largest US conglomerate’s offer for Wellstream comes at a time when GE officials said the company could have $30 billion available for acquisitions over the next few years.
This follows a period when GE was more active in selling operations, including its NBC Universal media business and parts of its finance operation.
Wellstream would not comment on Wednesday on GE’s statement that it had made a proposal at 750 pence per share, which led some investors to conclude it may be talking with other suitors.
Fairfield, Connecticut-based GE, which also owns Vetco Gray, a maker of equipment used in deep-sea oil and gas production, did not rule out further moves.
“GE reserves the right to make an offer on less favorable terms,” the company said in a statement. “GE is disciplined in its acquisitions, and as such, there can be no certainty that it will take any further action.”
GE shares were up 2 cents at $16.53 in early trading on the New York Stock Exchange.
British analysts said Wellstream could be talking with other bidders.
“Wellstream has not put out a release and this would imply that it is talking to other parties over a potential offer,” Panmure Gordon analyst Peter Hitchens said.
He named National Oilwell Varco and Saipem as potential acquirers of Wellstream which makes flexible pipes used by oil companies in deep water, a product for which there is expected to be growing demand as oil companies increasingly move to deeper water to search for oil and gas.
Wellstream shares, which had gained 25% to a two-year high since the company said on 21 September it had been approached, were down 3.4% to 753.5 pence at 0840 GMT after GE appeared to rule out a higher offer.
Hitchens said the fact GE had issued the statement suggested it was backing down.
Royal Bank of Canada analyst Todd Scholl said: “Right now the bid/ask spread appears to be too wide so a deal may not be immediately forthcoming. However, we think eventually a deal does get done with one of Wellstream’s many suitors.”
The company has been a frequent subject of takeover rumors, with market chatter often linking it to Europe’s largest oil services company, Saipem, despite the Italian company saying last year it had no plans for acquisitions in the flexible tubes sector.
National Oilwell Varco and Aker Solutions were also potential acquirers, Scholl said in a research note in August.
Wellstream’s manufacturing facility in Brazil, keen for locally produced materials to be used in extracting its billions of barrels of oil reserves, is seen as a key attraction for potential buyers.
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First Published: Wed, Oct 06 2010. 07 09 PM IST