GE to Acquire Lufkin Industries
Earlier this month, GE (NYSE: GE) and Lufkin Industries Inc. (NASDAQ: LUFK) announced that GE will acquire Lufkin Industries for approximately $3.3 billion USD; Lufkin shareholders will receive $88.50 per share in cash. Lufkin provides artificial lift technologies for the oil and gas industry and manufactures industrial gears.
Artificial lift is used in 94 percent of the roughly 1 million oil-producing wells globally to improve the efficiency of naturally flowing wells; the global artificial lift sector expected to approach $13 billion in 2013, according to Spears & Associates.
This acquisition strengthens GE’s artificial lift offerings, allowing the company to include rod lift, gas lift, plunger lift, hydraulic lift, progressive cavity pumps and a sophisticated array of well automation and production optimization controls and software. Oil & Gas represents GE’s fastest growing business.
“The artificial lift segment is at the heart of critical changes that are helping producers maximize well potential-which translates into increased output at lower operational cost,” says Daniel C. Heintzelman, president and CEO, GE Oil & Gas. “Lufkin's world-class people, equipment and services fit perfectly in our portfolio and will enable us to offer a wide range of artificial lift solutions to our customers in this fast-growing artificial lift sector."
“GE represents an excellent new home for Lufkin's technologies, services and our highly skilled and experienced employees," says John F. "Jay" Glick, Lufkin's president and CEO. "This transaction allows us to realize our strategic objectives for expanding both our portfolio and our global platform and will allow us to reach global customers much faster and more effectively than we could have done as a standalone company.
The transaction was unanimously recommended by the board of directors and is expected to close in the second half of 2013 subject to Lufkin shareholders' approval, regulatory approvals, and customary closing conditions.