UPDATE 3-GE to buy UK oil pipemaker Wellstream for $1.3 bln

* GE pushes further into oil services and deepwater

* Follows industry trend of consolidation

* GE boosts presence in Brazil’s booming oil industry

* Bid of 786p/share up from earlier 750 p/share offer

* Wellstream shares rise 5.4 pct; GE up 0.7 percent
(Adds background on GE)

By Tom Bergin

LONDON, Dec 13 (BestGrowthStock) – General Electric Co (GE.N: )
reached a deal to buy Wellstream Holdings Plc (WSML.L: ) by
raising its bid for the British oil drilling pipemaker by 6
percent to 800 million pounds ($1.3 billion).

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 (BP.L: ) spill in the Gulf of
Mexico this summer, the industry expects deepwater drilling to
continue apace.

The acquisition would also give GE a strong footing in
Brazil, where Wellstream has a manufacturing plant.

Brazil has made a series of multibillion barrels oil
discoveries in recent years in very deep water — areas that
are traditionally expensive for oil producers and a major
opportunity for equipment makers.

GE will pay 780 pence in cash plus a special dividend of 6
pence per Wellstream share, the companies said in a joint
statement on Monday. Wellstream rejected an earlier bid of 750
pence per share from GE, the U.S. conglomerate said in October

GE has said it could spend up to $30 billion on takeovers
in the coming years as Chief Executive Officer Jeff Immelt
renews the company’s focus on heavy manufacturing after
reaching a deal to sell its media unit and deciding to scale
back the GE Capital finance arm.

Immelt has said energy will be a major area of focus for
the company, the world’s largest maker of jet engines and
electric turbines.

Wellstream is one of only three main manufacturers of
flexible “riser” pipes, which connect drilling rigs to
well-heads on the sea floor.

The other two manufacturers are France’s Technip (TECF.PA: )
and Italy’s Prysmian (PRY.MI: ), although other companies make
rigid risers, a rival technology.

Shares of Wellstream traded up 5.4 percent at 787 pence,
suggesting investors did not expect a rival bid to emerge,
while GE gained 0.7 percent to $17.85 in premarket trading.

Wellstream said in September it had received a number of


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
[DRESS.UL], a maker of gas engines used to power oil and
natural gas production equipment. [ID:nN06257914]

Rivals have also been busy snapping up smaller players.

On Monday, Wood Group (WDGJY.PK: ) said it would acquire
unlisted Aberdeen-based rival PSN for $955 million, including
$325 million of debt, in the latest in a long line of
acquisitions by the UK oilfield services provider.

Besides cost savings from such consolidation, analysts say
the typically big oil companies that operate in deep water
prefer to deal with larger service providers that offer a broad
range of services.

Investment banks Credit Suisse (CSGN.VX: ) and Rothschild
advised Wellstream, while Goldman Sachs (GS.N: ) advised GE.
(Additional reporting by Scott Malone in Boston and Sakthi
Prasad in Bangalore; Editing by David Holmes and Lisa Von Ahn)

UPDATE 3-GE to buy UK oil pipemaker Wellstream for $1.3 bln