LUFKIN, TX (KTRE) - LUFKIN, TX (KTRE) - General Electric Co. will buy the oilfield equipment maker Lufkin Industries, Inc. for about $3 billion, furthering an effort by GE to grow its oil and gas operations.
GE said Monday it would pay Lufkin shareholders $88.50 per share in the all-cash deal, a 38 percent premium over Lufkin's closing price on Friday of $63.93.
The companies value the deal at $3.3 billion.
CEO Jeff Immelt is in the process of transforming GE from a sprawling conglomerate to one that is more tightly focused on providing services and equipment to industrial customers. The company has shed divisions such as NBC Universal and is shrinking its banking operations.
At the same time, GE is trying to grow its energy-related operations.
Based in Angelina County, Lufkin Industries makes pumping equipment that helps drillers extract more oil out of older oil fields.
Lufkin Industries spokesman Brian Gifford said he would not comment on the merger, instead referring to a GE press release.
Sean Gannon, the oil and gas spokesman for GE, said no jobs would be lost and both employees and customers will benefit from the merger.
"We have no layoffs in the future," Gannon said. "It's a growing sector and Lufkin Industries is good at what they do."
"If I'm someone in Lufkin Industries right now, it just shows what great work Lufkin is doing and shows very positive growth," Gannon said. "GE just got into artificial lift pump technology. Lufkin doesn't offer electric submersible pumps and with GE buying Lufkin, it will kind of be a one-stop shop."
"GE's main goal is helping Lufkin Industries grow and using GE's global size to help Lufkin Industries grow," Gannon said.
East Texas financial advisor Trey Wilkerson said it appears GE will buy out all the shareholders and it does not appear shareholders will get stock in the new company.
Wilkerson also said there is not point in buying Lufkin Industries stock because he expects the trade to stay close to the purchase price.
"When it closes the people who own Lufkin Industries stock will no longer own Lufkin Industries stock," he said. "They will have $88.50 of cash for every share they used to own."
"I have watched Lufkin Industries for at least 40 years and as an electric person, they were a valued customer of ours and as the mayor they have been a great citizen," said Lufkin Mayor Bob Brown.
With regulations in place from the department of justice, not much can be discussed but County Judge Wes Suiter feels the move is one going in the right direction.
"I talked with Jay Glick, president of Lufkin Industries, and he seems to think it is a good opportunity for Lufkin Industries and the city of Lufkin and Angelina County," Suiter said.
And the impact that the Lufkin company turned international industry has is not taken lighly.
"You can't hardly go to a place that is pumping oil that has a Lufkin pumping rig," said Deputy City Manager Keith Wright.
And some leaders feel the future of the company will look even brighter once the sale is approved.
"It looks like it is going to be a good fit," Suiter said. "They are looking to grown the oil industry."
"With the management that is there and with the management at GE, I just feel certain that everything will work like it always has," Brown said.
"It will result in the expansion of their operation and an expansion in their customer base," Wright said.
A future that the mayor hopes will still involve the name "Lufkin Industries."
"The name that we share as a city and an industry will only go to make it a better place," Brown said.
"Can't be bad," said John Begee, a mechanic with the company. "GE is a good company."
"Hopefully I can get hired on permanently because I am working as a temp right now," said another worker coming off his shift Monday.