NEW YORK (AP) -- Shares of oilfield services companies rose Monday after General Electric Co. announced plans to buy Lufkin Industries Inc. for $3.1 billion, expanding its oil and gas operations.
GE's offer of $88.50 per share represents a 38 percent premium over Lufkin's Friday closing price of $63.93. The companies valued the deal at $3.3 billion, which includes $200 million in debt to be assumed by GE.
In afternoon trading Lufkin shares jumped $24.07, or 38 percent, to $88, after hitting a new 52-week high of $88.57 earlier in the day.
GE is in the process of transforming itself from a sprawling conglomerate to being more tightly focused on providing services and equipment to industrial customers. In particular the company is focusing on oil and gas, hoping to capitalize on the boom in extracting oil from difficult places, such as deep offshore, underground shale formations or older, dwindling oil fields.
Credit Suisse analyst James Wicklund said the acquisition shows how important certain kinds of artificial lifts used to increase the flow of liquid from a production well have become in the world of oilfield equipment, noting that Lufkin is one of the industry's top providers of rod lifts, along with Weatherford International Ltd. and Dover Corp.
Raymond James analyst Darren Horowitz said he doubts there will be a competing bid for Lufkin, noting that GE is usually the highest bidder when it comes to companies it wants to buy. He added that the move could boost interest in Weatherford, but said he doesn't expect any near-term merger and acquisition activity.
In afternoon trading Weatherford shares rose 42 cents, or 3.5 percent, to $12.46. Dover shares added $1 to $72.75, National-Oilwell Varco Inc. rose 24 cents to $67.86 and Baker Hughes Inc. edged up 2 cents to $44.72.