General Electric has confirmed that it is to pay $3.3bn to Warren Buffett’s Berkshire Hathaway to buy back preference shares that Mr Buffett bought during the credit crisis in October 2008, the FT reports. Berkshire is being paid a 10 per cent premium on its original $3bn investment and has also been collecting a 10 per cent dividend. Berkshire Hathaway made the 2008 investment as part of a plan to shore up confidence in GE, following a sharp rise in the cost of insuring debt for GE Capital, the financial services arm, which represented about half the group at the time. GE was subsequently forced to cut its dividend and lost its triple A credit rating, as GE Capital suffered large losses. Its earnings have since rebounded, although it has been hit again over the past couple of months by turmoil in the financial markets.
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The Wall Street Journal reports that the Federal Reserve Bank of New York is once again facing scrutiny over stockholdings held by a senior official during the 2008 financial crisis. Then-New York Fed President Timothy Geithner is said to have issued a waiver that allowed William Dudley—executive vice president of the regional Fed bank’s markets group—to work on the controversial bailout of American International Group (AIG) even though he held shares in the company. The New York Fed, one of the most critical entities when it comes to buying and selling government securities, played an important role in shaping Washington’s response to the crisis, according to congressional audit report released Thursday. The paper says the waiver allowed Dudley, a former Goldman economist who became New York Fed president in January 2009, to also work on issues involving General Electric, another company that received US assistance, even though he also held shares in that company.
General Electric is making “a big bet on gas” in an attempt to benefit from the increased use of the fuel for power generation, in part as a back-up to variable renewable energies such as wind and solar power, the FT reports. John Krenicki, the vice-chairman of GE in charge of its energy business, said the group was “looking at a 25-year, very bullish market” for gas, and making acquisitions and investing in new products to profit from it. The rise of gas for power generation is being driven by cheap supplies becoming available in the US, and perhaps eventually elsewhere, as well as by its lower carbon dioxide emissions when burnt than coal and its good fit with renewable energy. Mr Krenicki said: “We are betting on gas in a big way, investing ahead of the curve.
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General Electric has stepped up its M&A activity in the energy sector, agreeing to buy most of Converteam, a privately owned maker of power conversion equipment, for about $3.2bn, reports the FT. The US conglomerate has moved aggressively in the past six months to bolster its energy business, purchasing a string of companies, including Dresser and John Wood Group. The Converteam deal brings the total spending to about $11bn. The M&A drive is part of a broader push by Jeff Immelt, GE chief executive, to return the company to its industrial roots after a damaging overdependence on financial services in the credit crisis. However, GE’s track record on acquisitions under Immelt has been mixed. Lex notes that GE’s push into energy is right but it could still lead to ‘egg on the face’.
General Electric will pay $2.8bn for the well-support division of John Wood Group, the UK oil services company, continuing its drive to expand in the energy industry by acquisition, the FT says. The deal is the fourth acquisition for GE’s energy business in recent months, taking its total spending to $7.5bn, as the group seeks to reduce its dependence on its financial arm, GE Capital, and strengthen its position in industrial and infrastructure markets. “Five years ago, our revenues from oil and gas drilling and production equipment were zero. Now, out of nowhere, we are a force to be reckoned with,” said John Krenicki, chief executive of GE’s energy business.
General Electric, the US industrial group, will pay $2.8bn for the well-support division of John Wood Group, the UK oil services company, highlighting its push to expand in the energy industry, reports the FT. The deal is the fourth acquisition for GE’s energy business in recent months, taking its total M&A spending to $7.5bn. The disposal is a significant deal for Wood Group, which has a market cap of about £3bn. The company announced in December it would buy its smaller rival PSN for $955m to become the world’s leading brownfield production services provider. The WSJ adds that GE paid a “high price” to trump rivals including oil services giant Halliburton for the well-support unit.
US energy services company John Wood Group has put its well support division on the block and has hired Credit Suisse to advise on the sale, reports Reuters, citing sources close to the matter. First-round bids were due on Wednesday for the unit, with valuations expected to range from $1bn to more than $2bn. Wood Group’s market cap as of Wednesday was about $4.9bn. The company has not yet released full year results, but the well support division accounted for more than a third of its pretax earnings in the 2010 first half. Possible bidders could include General Electric, Halliburton, Weatherford International, Cameron International and FMC Technologies, the report adds.
Standard Chartered is to buy the Singapore automotive financing arm of General Electric, the US conglomerate, for nearly S$1bn (£488m), the FT reports. The business, which is part of GE Capital, has assets of S$2.35bn. Standard Chartered makes about 90% of its revenues in Asia. It said that the acquisition was an opportunity to add scale to its consumer lending businesses in Singapore, which last year recorded economic growth of nearly 15%.
US and Chinese officials touted a $45bn package of export deals on Wednesday to coincide with the state visit of Hu Jintao, the Chinese president, but the largest contract was in fact a reiteration of a previously announced order, notes the FT. US companies have been critical of China in the past 12 months, pressing the administration of Barack Obama to toughen defence of their intellectual property rights and their ability to access lucrative Chinese government procurement contracts. To smooth the waters, the Chinese president met the chief executives of high- profile US companies on Wednesday such as Jeff Immelt of General Electric, Steve Ballmer of Microsoft and Lloyd Blankfein of Goldman Sachs. The export package includes a $19bn order for Boeing aircraft, 70 extra contracts involving 12 US states worth $25bn and a series of investment deals. Combined, the deals will support about 235,000 US jobs, the White House said.
Bond markets have started the year with a bang, writes the FT. A rush of deals from blue-chip companies, including Berkshire Hathaway and General Electric, and dozens of financial institutions have raised hopes that 2011 will be another big year for issuance. With $99bn of debt sold in the bond markets so far this week – about half of it denominated in dollars – it is clear that investor demand for bonds, among the most popular asset class in the past two years, remains solid.
A wave of midsized transactions in the UK on Monday buoyed equity markets and raised bankers’ hopes of an imminent recovery in M&A activity, reports the FT. From oil to pharma and chemicals, UK companies were both predator and prey as deals put on ice during the financial crisis were finally executed. Among the efforts to tap faster-growing markets, General Electric sealed its £800m acquisition of Wellstream, the UK oil and gas services provider, while Reckitt Benckiser snapped up Paras Pharmaceuticals, the privately-held personal care company, for about $726m, and John Wood, the UK oil and gas services company, bought its unlisted Scottish rival PSN for $955m, including $325m of debt.
General Electric has agreed to buy Wellstream, the UK-based oil and gas services group, for approximately $1.3bn, marking another step in an aggressive expansion into energy services, the FT reports. Monday’s deal ends months of pursuit in which Wellstream twice rebuffed GE offers, including a $1.19bn bid made in October. Wellstream has manufacturing bases in the UK and Brazil and is one of the world’s largest suppliers of flexible pipes for the oil and gas sector. One of its main attractions to potential bidders is its exposure to Brazil, which is investing heavily in exploration. The acquisition will also move forward GE chief executive Jeff Immelt’s strategy to focus on the company’s energy unit as a profit driver, and follows GE’s buying of oil-field specialist Dresser earlier in the year, Bloomberg says.
General Electric is set to seal a £755m-plus takeover of Wellstream, the UK oil and gas services group, as part of its aggressive expansion into energy services, reports the FT. The deal could be announced as early as Monday. Wellstream has twice rebuffed the US conglomerate, but the two sides have now agreed a price. Wellstream’s board had rejected as too low GE’s previous offer, in October, of 750p, valuing Wellstream at £755m. GE’s third offer is understood to be substantially higher than 750p a share but less than 800p. The deal will end months of pursuit by GE of Wellstream which announced in September it had received several bid approaches. National Oilwell Varco was among GE’s rival suitors and, says the Telegraph, may still try to trump GE’s offer..
General Electric has struck a $3bn deal to buy Dresser, a Texas-based maker of gas engines used to power oil and natural gas production, marking its first big acquisition since the global financial crisis began, the FT reports. The deal came after GE confirmed it had made a £755m ($1.2bn) offer for Wellstream, a UK maker of flexible pipeline products for oil and gas companies, but had been rebuffed. Reuters says the Dresser deal is the latest sign that corporate America, which is sitting on huge cash reserves, is growing more willing to spend money on takeover deals.
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Jeffrey Immelt, General Electric’s chief executive, on Tuesday rowed back from criticisms he made this month of China’s hostility to foreign companies and of Barack Obama’s fractious relationship with business. Speaking to the FT on Tuesday, Mr Immelt said: “China is a very important market for GE. It’s one that we do quite well in. It’s one that we’re committed to for the long term.”
Jeffrey Immelt, GE’s chief executive, launched a rare broadside against the Chinese government, which he accused of being increasingly hostile to foreign multinationals, the FT reported. “I really worry about China,” Mr Immelt told an audience of top Italian executives in Rome, accusing the Chinese government of becoming increasingly protectionist. “I am not sure that in the end they want any of us to win, or any of us to be successful.” GE later moved to distance itself from his remarks.
South Korea’s National Pension Service will next week take a 12% stake in Gatwick airport, in a further push to expand its international portfolio from $240bn to $400bn by 2014. The deal follows NPS’s acquisition last year of HSBC’s headquarters at London’s Canary Wharf for £773m. Gatwick was sold last year to Global Infrastructure Partners, a fund backed by Credit Suisse and General Electric.
Comcast has sealed an agreement to take control of NBC Universal from General Electric in a deal valuing the media property at $30bn and creating one of the largest US media companies. Comcast will pay about $6.5bn in cash and will own 51% of the combined venture and GE will own 49%. Vivendi has agreed to sell its 20% stake in NBCU back to GE for $5.8bn. The new venture will take on $9.1bn in debt to third party lenders.
Comcast’s long-awaited bid for control of NBC Universal will value the new joint venture with General Electric at an unexpectedly larger $37.25bn before debt, boosted by a higher valuation on the US cable group’s pay-TV stations, and also the potential for a larger cash outlay than earlier foreseen. The US cable service company’s bid for a 51% stake values existing NBCU assets – including NBC television, Universal Studios and cable channels – at $30bn including $9bn of debt. The deal follows months of haggling with GE, NBCU’s 80% owner, and Vivendi of France, which holds 20%.
Vivendi will not receive any cash upfront from General Electric for its stake in NBC Universal under a $5.8bn proposed deal agreed this week. GE will pay more than its original offer of about $5bn for the French media group’s 20% stake in NBCU but delay payments until at least late next year. The deal came despite an earlier contract that each year gives Vivendi the right to cash out by forcing an IPO of its stake unless GE buys it at a mutually agreed price. Vivendi’s window to exercise this option runs from Nov 15 to Dec 10. The deal paves the way for GE to sell 51% cent of NBCU to Comcast for about $30bn.
General Electric has agreed to pay Vivendi $5.8bn for the French group’s 20% stake in NBC Universal, paving the way for the conglomerate’s planned sale of 51% of the US media group to Comcast. The valuation, reached after protracted negotiations, is at the high end of expectations and equates to one fifth of the valuation that Comcast’s $30bn deal puts on NBCU, excluding debt. However, it is slightly below the stake’s current valuation in Vivendi’s books.
Alstom and Schneider Electric of France on Monday night trumped foreign rivals GE and Toshiba with a €4.1bn (£3.7bn) bid for the transmission and distribution arm of Areva, France’s state-owned nuclear group. Areva’s supervisory board announced it would enter exclusive negotiations with the two French bidders after a protracted meeting. The news is likely to spark accusations of protectionism, as the French bid was not the highest and the government in recent days appeared to delay a decision in order to give Alstom and Schneider time to revise their offer.
Comcast may seal a deal to buy a controlling stake in NBC Universal from General Electric by next Monday, creating one of America’s largest media companies. The deal, which values NBC Universal at about $30bn, would give Comcast, the top US cable operator, a 51% stake in a joint venture that would combine its cable channels with the oldest US broadcast network. The deal is at an advanced stage but could yet fall apart. It also depends on whether Vivendi sells its 20% stake in NBC Universal back to GE.
French telecoms and media company Vivendi is considering selling its 20% stake in NBC Universal this year, reports the WSJ. However a final decision will not be made until at least mid-November and will depend on whether Vivendi can get a good price, leaving the fate of the movie and TV company in limbo as NBC Universal’s majority owner GE and US cable operator Comcast discuss a deal to merge NBC Universal with Comcast’s TV networks. The deal relies on whether Vivendi decides to sell.
Comcast is in talks with General Electric to create a new venture that would combine NBC Universal and the content assets of the top US cable operator. The potential Comcast deal emerged this week as one of several options GE is pursuing as it waits for Vivendi, which owns 20% of NBC Universal, to exercise its right to sell the stake back to GE or force a stock sale.
Comcast, the largest US cable network, is in talks with General Electric to buy a stake in NBC Universal, reports Bloomberg. Negotiations for Comcast to buy about a 50% NBC Universal stake have been ongoing and a deal would depend in part on Vivendi making a decision to sell its 20% holding, said a person familiar with the discussions.