The Terms of the Deal
GE announced that it reached an agreement to acquire Wellstream for $1.3 billion in cash. The deal was based on a price of 780 pence for each share of Wellstream, and Wellstream's stock has moved up about 5% to 786.50 in trading. This is not a case, though, of rampant expectation of a rival bid - part of GE's deal for Wellstream also included a special six pence special dividend above and beyond the bid price. All in all, going back to late September and the time before the company publicly talked about receiving expressions of interest in a buyout, the stock is up about 29%.
Valuing this deal is a little tricky, as Wellstream's 2010 looks to be a down year in a more generally upward trend. On a normalized basis, it looks like GE is paying about 14-times Wellstream's EBITDA - double the current valuation of rival Technip (on a similarly normalized basis), and a pretty healthy multiple relative to U.S. subsea equipment companies like Cameron (NYSE:CAM), National Oilwell Varco (NYSE:NOV) and FMC Technologies (NYSE:FTI).
Please click below for the full piece:
http://stocks.investopedia.
