American giant General Electric revealed yesterday a deal worth nearly £800million to buy British oil and gas services firm Wellstream Holdings.
The board of Newcastle-based Wellstream, which has twice rebuffed the US conglomerate, gave its support after GE upped its takeover price from 750p a share to 780p, valuing the company at around £785million. GE will also pay a special dividend to Wellstream shareholders worth £6million.
Wellstream, which makes pipeline products and systems, has two manufacturing facilities at Newcastle and in Brazil and employs more than 850 staff. Subject to shareholder approval, the business will operate as part of GE Oil & Gas, which designs and makes surface and subsea drilling and production systems.
Vetco Gray, which has a base in Aberdeen, is already part of GE Oil & Gas.
Yesterday’s proposed deal is thought to be the biggest deal for GE in Britain since it bought medical equipment maker Amersham in 2003. It also marks the latest foreign takeover of a UK company.
Engineering and manufacturing group Tomkins was recently bought by Onex, Canada’s biggest publicly traded private equity group, and the Canada Pension Plan Investment Board, for £2.9billion. While the bid from GE will see Wellstream fall into foreign hands, it spent much of its history under American ownership and was founded in Florida in 1983.
It was bought by Dresser Industries in 1995, which oversaw the building of its modern manufacturing facility in Newcastle two years later. The group then became part of US oil company Halliburton after Dresser merged with the firm, but was then bought again in 2003 by private equity before being listed on the London stock exchange in 2007.
Yesterday’s deal reunites Wellstream with Dresser as GE acquired the Texas-based maker of gas engines for around £2billion in October.
A national newspaper said one of the attractions of yesterday’s deal was Wellstream’s exposure to Brazil, which is investing heavily in exploration.
Petrobras, the country’s major energy group, accounts for a sizeable part of Wellstream’s income.