Wellstream spurns £755m takeover offer from GE

The oil industry services group Wellstream Holdings has rejected a £755m bid from giant US conglomerate General Electric.

GE said yesterday that it was "disappointed" the board of London-listed Wellstream, which focuses on the fast-growing Brazilian offshore market, refused its 750p-a-share proposal.

"GE is disciplined in its acquisitions, and as such, there can be no certainty that it will take any further action," the company said in a statement to the Stock Exchange. The company reserved the right to make an offer on "less favourable" terms following the completion of due diligence.

GE is not expected to go hostile, not least because its offer is well below the prices of 800p-per-share and above estimated for Wellstream by the majority of City analysts.

Wellstream itself declined to comment yesterday, raising expectations that the company is in talks with another possible suitor.

The Newcastle-based group is the world's largest supplier of flexible pipes used in offshore drilling and is also closely involved in the technical advances needed to develop the so-called "sub-salt" deposits in the deep water off Brazil.

The company has been the subject of widespread takeover rumours for some months and in mid-September Wellstream's management confirmed the company had received a number of preliminary approaches. The group declined to give any names, but several are still tipped as possible acquirers of Wellstream, including National Oilwell Varco and Saipem.

Peter Hitchens, an oil and gas analyst at Panmure Gordon, said: "Wellstream is an attractive opportunity for any predator."

The group's stock has risen more than 40 per cent to over 770p since the start of September, fuelled by speculation about the company's future. But it dropped by 2.44 per cent to close at 761p yesterday, despite suggestions that the statement from GE might prove a boost to any other talks.

Keith Morris, an analyst at Evolution Securities, said: "Another suitor may break cover now that GE has laid its cards on the table and indicated that 750p is the upper end of its price range."

Wellstream's most recent financial results, in August, showed an order backlog up by 14 per cent to £246m in the first half of the year, and gross margin improved by nearly one percentage point to 24.6 per cent. But the group issued a profits warning in July and first-half pre-tax profits dropped from £26m to £11m. The company blamed a "subdued" market outside Brazil.

Wellstream is particularly active in Brazil, which contributed around half the company's revenues. Recent major contract wins with state-owned Petrobras in the Marlim Sul field and another substantial supply contract with OGX helping boost the forward order book.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project