John Wood Group shares jump on GE deal
- 14 February 2011
- From the section Business
Shares in energy services company John Wood Group jumped 13% to close at 650p after it announced a deal to sell its well support division to US conglomerate General Electric (GE).
The $2.8bn (£1.7bn) deal was announced on Sunday. The Aberdeen-based company said the sale, which needs shareholder approval, should complete this year.
Wood Group said it would return at least $1.7bn of cash to shareholders.
The deal is part of GE's expansion plans in the oil and gas industry.
In December, it announced a deal to buy Wellstream Holdings for $1.3bn.
"The significant investment programme in Well Support over the years and the expertise and dedication of all our people is reflected in the price achieved," said John Wood Group chief executive Allister Langlands.
"I believe that GE will be a good owner of the business and, with its scale and reach, be able to accelerate the future international growth of the business."
The sale is understood to be the largest divestment by Wood Group, after years of growing by acquisition.
In December, for example, the firm agreed to buy engineering services company PSN, also based in Aberdeen, for £600m.
The GE sale also represents a shift in focus to its other two divisions - engineering and production, and gas turbines.
If the deal gains regulatory and shareholder approval, GE will take on the 3,800 staff in the well support division, spread across 20 centres.
Closer to Wood Group headquarters, only 100 employees will transfer, in the Peterhead base for Pressure Control.