Doubling up: GE buys oil/gas service co. Vetco for $1.9 billion

Posted Jan 8th 2007 3:15PM by Joseph Lazzaro
Filed under: International Markets, Deals, Competitive Strategy, Exxon Mobil (XOM), India, China, Brazil, Russia, Middle East, Venezuela, Thailand, Halliburton (HAL), Schlumberger Limited (SLB), Allegheny Energy (AYE), Chesapeake Energy (CHK), Chevron Corp (CVX), ConocoPhillips (COP), Duke Energy (DUK), Valero Energy (VLO), PetroChina Co Ltd ADR (PTR)

General Electric Company (NYSE:GE) added to its diversified operational base Monday by agreeing to buy oil and gas services company Vetco Gray for $1.9 billion from a private equity group.

Vetco, which is expected to post 2006 revenue of $1.6 billion, provides drilling, completion, and production equipment for oil and gas fields. GE's purchase of Vetco, with about 5,000 employees, essentially doubles the size of GE's oil & gas business, to about 10,000 employees. GE said it expects demand for energy services to increase more than 50% by 2025, with much of that robust demand coming from emerging market countries. Shares of GE were slightly lower Monday, down about 10 cents to $35.45 in afternoon trading.

Investment Analysis: GE is a low-risk stock suitable for most investors whose portfolios contain stocks. If your portfolio needs a diversified, blue-chip stock, consider buying a full position of GE at this level, about $37.45. Buy 100 shares if you typically buy 100 shares, 500 if you buy 500.

Tags: GeneralElectric