GE to buy oil pump maker Lufkin for nearly $3 billion
By Ernest Scheyder
(Reuters) - General Electric Co is buying oilfield pump maker Lufkin Industries Inc for $2.98 billion, sharply increasing its presence in the fast-growing market to extract oil and natural gas from shale rock, the conglomerate said on Monday.
Lufkin's pumps, also known as artificial lift products, are commonly seen seesawing back and forth on top of energy wells to pull oil and natural gas to the surface.
The deal, which the parties expect to close by June, is GE's first major acquisition since the conglomerate sold its remaining stake in NBC Universal two months ago and will nearly double revenues of the company's Oil & Gas unit. CEO Jeff Immelt has spoken openly of GE's plans to focus more on growth in the energy-rich shale fields of North Dakota, Texas and elsewhere in the United States.
GE Oil & Gas will become the company's third-largest manufacturing unit by revenue behind the power and water and aviation units. It has been growing at a breakneck clip, posting a 16 percent jump in revenue from 2011 to 2012.
The unit posted 2012 revenue of $1.92 billion, and Lufkin had 2012 revenue of about $1.3 billion.
Immelt said last fall that GE would seek acquisitions in the $1 billion to $3 billion range. Natural gas development is "the place to play both in terms of the U.S. and the rest of the world," he told analysts at the time.
Lufkin, named for its hometown in Texas, was founded in 1902 to make railroad equipment. The company expanded into oil pumps in 1925 and stayed private until launching an initial public offering in 1990.
GE has spent about $11 billion in acquisitions since 2007 to boost its presence in the oil and gas business, which is its fastest-growing and accounts for about 10 percent of its revenue. Continued...