UPDATE 1-Wellstream in talks over $1.2 bln deal -paper

* Analyst says new approach could be at 775 to 800 pence

* Shares 748.5p vs GE’s initial 750p/shr approach

(Adds share price, company no comment, analyst comment)

LONDON, Dec 1 (BestGrowthStock) – Wellstream (WSML.L: ) has entered
into formal talks with General Electric (GE.N: ) and National
Oilwell Varco (NOV.N: ) over a potential 755 million pound ($1.2
billion)-plus deal, a British newspaper said on Wednesday.

The oil pipe-maker has allowed both firms access to its
books as it tries to negotiate a higher offer from the two
bidders, The Daily Telegraph said, citing unnamed sources.

Shares in Wellstream gained 2.1 percent to 748.5 pence at
1057 GMT, below the 750 pence per share value of GE’s initial
approach.

Wellstream declined to comment when contacted by Reuters.

GE said in October Wellstream had rejected an approach it
made which valued the company at 755 million pounds.
[ID:nLDE69506K]

“This is what we’ve been expecting that the reason that
there was a delay was because GE and National Oilwell Varco were
doing their due diligence,” said Royal Bank of Canada analyst
Todd Scholl.

Scholl said he thought any new bid would have to be pitched
at between 775 pence and 800 pence per share and probably closer
to 800 pence.

BRAZILIAN INFLUENCE

Wellstream makes flexible pipes used by oil companies in
deep water, an area set for strong growth due to major finds in
Brazil, where state-run oil firm Petrobras (PETR4.SA: ) accounted
for around 60 percent of Wellstream’s business in 2009.

“It’s important that these companies [GE and National
Oilwell Varco] make sure that Petrobras is on board with their
acquisition of the company because clearly that’s the future
driver of growth,” Scholl added.

GE said in October it was “disciplined” about deals and it
might not make another approach or could do so “on less
favourable terms”.

Wellstream said on Sept. 21 it had received a number of
approaches, sending its shares up by 29 percent that day. The
share price has since hovered between 740 pence and 760 pence,
falling by 1 percent overall in the last month.

Wellstream, whose main competitor in flexible pipe making is
the French offshore engineering group Technip (TECF.PA: ), has
been a frequent subject of takeover speculation.

Market chatter has often linked it to Europe’s largest oil
services company, Saipem (SPMI.MI: ), despite the Italian company
saying last year it had no plans for acquisitions in the
flexible tubes sector. [ID:nLR537991]

Scholl said it was likely Petrobras would prefer a
manufacturing company like GE and National Oil Varco to acquire
Wellstream, rather than an offshore installation company like
Saipem.

Wellstream’s manufacturing facility in Brazil, which is 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.

(Reporting by Sarah Young and Michel Rose; Editing by
Muralikumar Anantharaman and Erica Billingham)

($1=.6431 Pound)

UPDATE 1-Wellstream in talks over $1.2 bln deal -paper