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General Electric buys Lufkin Industries for $3.3 billion

Staff writer ▼ | April 8, 2013
General Electric (GE) will will acquire Lufkin Industries Inc., a provider of artificial lift technologies for the oil and gas industry and a manufacturer of industrial gears, for approximately $3.3 billion.
Lufkin Industries
Lufkin IndustriesGeneral Electric (GE) will will acquire Lufkin Industries Inc., a provider of artificial lift technologies for the oil and gas industry and a manufacturer of industrial gears, for approximately $3.3 billion.


Lufkin shareholders will receive $88.50 per share in cash for each of their Lufkin shares. Upon close, Lufkin will broaden GE Oil & Gas' artificial lift capabilities beyond electric submersible pumps (ESPs) 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. The ESP category of artificial lift is the only lift segment in which Lufkin does not currently compete.

Artificial lift, used in 94 percent of the roughly one million oil-producing wells around the world, helps lift hydrocarbons to the surface in reservoirs with low pressure and improves the efficiency of naturally flowing wells.

"Advanced technologies, combined with new drilling practices, are revolutionizing the oil and gas industry. 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," said Daniel C. Heintzelman, president and CEO, GE Oil & Gas.

Headquartered in Lufkin, Texas, with approximately 4,500 employees in more than 40 countries, Lufkin manufactures and services a broad portfolio of industry-leading artificial lift equipment through a global network of more than 110 service centers and nine manufacturing facilities.

"GE represents an excellent new home for Lufkin's technologies, services and our highly skilled and experienced employees. The global scale that GE offers, combined with its deep service offerings and network of research labs, will create new opportunities for our customers and employees around the world," said John F. Glick, Lufkin's president and CEO.

The transaction, which is unanimously recommended by Lufkin's board of directors, is expected to close in the second half of 2013 subject to Lufkin shareholders' approval, regulatory approvals and customary closing conditions.

The purchase price of $3.3 billion represents a multiple of approximately 13.5x based on 2013 estimated earnings before interest, taxes, depreciation and amortization. In 2012, Lufkin posted record revenues of $1.3 billion, which reflected growth of 37 percent. New business bookings in 2012 grew 38 percent companywide to $1.3 billion year over year, driven by a 47 percent increase in its artificial lift business. â– 


 

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