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Breakingviews: GE’s pumped-up deal

Monday, Apr 08, 2013 - 03:03

April 8 - Antony Currie and Christopher Swann explain why the 38 percent premium the conglomerate is paying for oilfield services company Lufkin may actually be a good price.

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General Electric has kicked off the week by paying a whopping 38% premium to abide Lufkin and also is still. Chris you've been net looking at this and we've been wondering what should G shells we hate this is a huge premium it's. The study enough times this is expected guitarist and more than most of -- anyone spreading credit for any of these these kind of swap. And yet the crucial thing -- spaces it's just gonna -- good deal. Size wise but also any saints is subsequently didn't thing for GT NT -- this. By the missiles it financially and rob -- exciting part of the and into effect and I noticed that he is an exciting the -- OK I doubt I'll take them both to get another disturbing image hit he's Viagra analogies but basically what this company does. If it takes old oil wells that don't have a lot of pressure on Kanye get the oil floating -- And it gives them an artificial big east. Front and the reason this is such a big deal. It's because. Lots of nations are hoarding that -- and it's rather hard to get access to it and for the big focus and -- -- -- on new in fact jobs run forty drilled. I'm just trying to trying to get more out of I'm not an old wells exactly right. -- -- -- -- -- it's not the biggest business deal local service is -- jail only guest does it's what 10% of their revenue. Yet accident has been growing well it's been growing incredibly tough they got into this business in 1994 billion in -- -- -- -- it's fifteen billion and that's and that's -- cheap to put any more perspective of the past 56 years they've got she spent eleven billion acquisitions and isn't it some pretty -- -- just the 28 grade -- third -- this deal. In itself obviously General -- had 268. Billion dollar industry that is a tiny tiny felt confident. I guess the question is -- General Electric to they have this tendency to pay for pay. Yet some people believe they have in the past. My sense that this is alone the multiple -- rich and related premium it's very decent. We've been very tough -- fact to put on some -- source of the past history is. This is set to -- the cut at Lufkin and -- and five of the top -- gonna hello Avalon Atlantic City 37% to last year right. And yet. Did not demand for this is probably an eight and again today and you gonna get great the coming years because they're not that these old wells that the companies really -- rejuvenate. Particularly in the United States like when they they know what they're doing their very few -- the tax regimes friendly -- -- absolutely a lot of these older wells get it gets sometimes the was MLPs and other other things that they can to some of scandals could tax benefits Saatchi. If you -- that you get more -- has been anything but have them there wouldn't want the tax funded medical -- -- why why -- truly -- well when you have a perfectly good wellness already producing and you can just give it a bit of artificial stimulus keep it going for little Lanka. -- okay well thanks that Chris will be keeping the more on that deal I'm we've applicable breaking these -- --

Breakingviews: GE’s pumped-up deal

Monday, Apr 08, 2013 - 03:03

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