GE Acquires Wood Group Division
GE announced that its Oil & Gas business has entered into an
agreement to acquire the Well Support division of John Wood Group PLC
(“Wood Group”) for approximately $2.8 billion. The transaction, which
the Board of Wood Group intends to unanimously recommend to its
shareholders, is expected to close later in 2011, subject to
shareholders’ approval and customary closing conditions.
In 2010, the Well Support division recorded revenues of $947 million and
EBITDA of $166 million (unaudited estimates), which reflected growth of
16% and 55% respectively over 2009. The division, which generated 13%
average annual revenue growth over the past decade, is expected by GE to
generate $1.1 billion in revenue and approximately $200 million of
EBITDA in 2011. In addition, with synergies from GE Energy’s global
scale and broad array of solutions, GE believes the business is well
positioned for significant top and bottom line growth going forward.
John Krenicki, Vice Chairman and President and CEO of GE Energy added:
“Enhanced oil recovery and unconventional hydrocarbon resource
development are energy industry mega trends with huge growth potential.
The Well Support Division and Wellstream acquisitions, when combined
with Vetco Gray and Hydril, position GE to take full advantage of these
trends. With the completion of these recent acquisitions, our drilling
and production portfolio will be comprehensive and complete at scale to
better serve our global customers and deliver double digit organic
growth for our investors."
Siemens now in the hunt
Meanwhile according to this story in The Local, Siemens seems poised to
enter the acquisition fray joining ABB and GE who have been hunting and
pouncing for some time and Honeywell and Rockwell who have also been
making strategic acquisitions.
“When we talk about larger acquisitions, we mean significant sums of up
to several billion euros,” Chief Financial Officer Joe Kaeser said in an
interview with the business daily.
He added that the company, Europe’s largest engineering group by sales,
had reached a level of “management maturity” that enabled it to pursue
significant takeovers.
The company will focus on an expansion of its power network segment as
well as looking at new techniques for energy efficiency and automation.
“This is where our focus will be – strategically and operationally, also
in terms of takeovers and when it comes to research and development,”
Kaeser said.
The new direction is a major shift from the company’s previous strategy,
which was concentrated on restructuring, expanding margins and internal
growth. It illustrates how companies in Europe and the United States
are looking for ways to spend the cash they have accumulated since last
year’s economic recovery.
The report said Siemens has about €15.6 billion in acquisition money to
spend and a company source told the Financial Times Deutschland that its
war chest was “filled to the brim.”
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