GE Buys Lufkin for $3.3 Billion as Immelt Adds to Energy
CEO of General Electric, Jeffrey Inmelt, has decided to take advantage of the oil drilling boom and GE’s rapid growth in the gas and oil sector. While moving towards more manufacturing, GE Capital is simultaneously shrinking.
The acquisition of Lufkin is one of the three largest within the past decade for oil machinery companies, and in order to finance such a purchase, Inmelt has reached into the cash reserves gained when GE sold NBC to Comcast. In fact, the sale of NBC has allowed GE to expand greatly, and the funds are going to be allocated specifically towards new deals.
Lufkin had been reduced to very low valuations recently, and GE took advantage of the price drop in order to seize a 15 percent market share of oil lift machinery. “’As high as 94 percent of existing oil wells are going to require some form of artificial lift,’ Daniel Heintzelman, CEO of GE Oil & Gas, said in a telephone interview.”
I feel with all of the developments involving oil, GE has a good position to continue growth in the oil industry. They can continue to expand and might even consider other forms of energy such as natural gas. By diversifying, GE is setting itself up for major growth in the long run.