General Electric, the US conglomerate, on Monday agreed a £288.7m cash offer for Sondex, the UK oilfield equipment maker.
The 460p a share bid represents a 35.3 per cent premium on Thursday’s closing price and is considerably higher than the target price for Sondex shares of around 400p set by some analysts last month.
Craig Howie, an analyst at Blue Oar Securities, said the offer was at the top end of the range but did not entirely rule out the possibility of a counter-bid from the US or even from UK peers Hunting or Expro.
GE has secured favourable letters of intent from holders of some 44 per cent of Sondex’s stock but only 6.4 per cent of those are irrevocable. However, Sondex did conduct a brief consultation and concluded no higher offer was likely even though the company was believed to have been a takeover target earlier in the year.
The unsolicited offer cames through GE subsidiary Drilling and Wireline Solutions which first approached Sondex a couple of months ago.
Sondex produces electro-mechanical equipment used in oil and gas fields. It floated in June 2003 with a market capitalisation of £38.8m, which had increased to some £194m by last Friday. It has been acquisitive itself, buying Aberdeen-based Geolink for £29.5m in 2004, Canada’s Bluestar for £11m last year, as well as Ultima Labs in Texas.
In June, the board of Sondex said first-quarter cumulative order intake was 20 per cent up on the previous year with strong demand from China and Russia, and R&D spend was being increased. In 2006 the company managed a 14 per cent rise in pre-tax profits to £8.5m.
If the offer is successful, Sondex will become a part of GE’s Energy Optimisation and Control business. There will be no redundancies among Sondex’s staff of 500.
Sondex produces sophisticated equipment that operates within oil wells. Following its acquisition of Geolink, it has offered a range of devices measuring and logging well performance. Its wireline division manufacturers a range of equipment including downhole tractors for moving other devices through wells, and cutting tools.
Investec was financial adviser to Sondex and Credit Suisse advised GE.
In early London trading, Sondex shares rose 8.2 per cent to 457¼p, after rising by almost a quarter on Friday when news of a possible offer emerged.
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