GE to Buy Vetco's Oil & Gas Unit for $1.9 Billion

Privately held Vetco International will sell its oil and gas business unit, Vetco Gray, to General Electric for $1.9 billion. The acquisition will provide GE with drilling equipment to assist it in its drive to capitalize on burgeoning global energy demand. The oil and gas equipment and services market is estimated at over $200 billion. With Chairman Jeffrey Immelt at the helm, GE's oil and gas business has surged ahead over the past few years as its traditional energy business, the manufacture of gas turbines, has stagnated. The company's oil and gas group grew about 13% to $3.59 billion in operating profit in 2005 from 2004, and the group of which it is a part, GE Infrastructure, is expected to show an operating profit of $47 billion for 2006 when the company reports on January 19. Houston-based Vetco, which has 5,000 employees in over 30 countries, is expected to generate more than $1.6 billion in sales in 2006.

• Sources: Bloomberg, Reuters, New York Times, Wall Street Journal
• Related commentary: Microsoft, GE, Intel Garner Most 2007 'Buy' Recommendations, GE and Citigroup Rallies: How Wall St. Missed It, GE Goes Nuclear. Conference call transcripts: Q3 2006
• Potentially impacted stocks and ETFs: General Electric Co. (GE). ETFs: WisdomTree High-Yielding Equity (DHS), WisdomTree LargeCap Dividend (DLN), WisdomTree Total Dividend (DTD), streetTRACKS DJ Wilshire Large Cap (ELR)

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