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Oil and Gas Company Acquisitions

Written By Brianna Panzica

Posted July 6, 2011

Ever since the Fukushima nuclear disaster in Japan, demand for nuclear has been waning.

This means an increase in demand for other energy sources like oil and gas.

And it also means growth for companies that handle these energy sources.

Pipeline companies are working on acquisitions as they expand their resources, just like we saw with the smart grid market.

National Oilwell Varco is one of these growing companies, and when it comes to natural gas, Energy Transfer Equity and Williams Cos are battling for another takeover.

Fiberglass-Composite Pipelines

National Oilwell Varco (NYSE: NOV) is working out a deal to acquire Ameron (NYSE: AMN), an industrial parts manufacturer based in Pasadena, California.

One of Ameron’s specialties, an operation that accounted for nearly half of their 2010 revenue, is their production of fiberglass-composite pipelines.

Fiberglass pipelines are considered more effective than regular steel pipelines as they handle difficult environments much better and wear out much slower.

National Oilwell is looking to increase their fiberglass output, adding Ameron’s production skills to their own Fiber Glass Systems, a company they acquired over a decade ago.

Ameron’s other outputs include concrete and steel pipelines for water transport, as well as other construction materials.

So far the deal, which has been approved by the boards of each company, is estimated around $722 million total, or about $85 a share.

The plans for the deal were revealed on Tuesday, and following this, shares of Ameron shot up 28%, increasing to $85.08.

Shares of National Oilwell also increased to $80.05, a 2.2% increase, according to the L.A. Times.

Bid Battles

When it comes to Southern Union Co (NYSE: SUG), the takeover bidding is still in full swing.

On Tuesday Energy Transfer Equity (NYSE: ETE) increased its original bid for Southern Union, $4.2 billion or $33 per share, to about $5.1 billion, $40.25 per share.

This surpassed Williams Companies (NYSE: WMB) offer of $39 a share, totaling $4.9 billion.

Shares of Southern Union, however, rose to $42.07 on Tuesday following the bid by Energy Transfer, indicating that investors expect further bidding before a deal is struck.

Expert Kevin Shacknofsky told Bloomberg that he expects the bidding to close between $42 and $44 a share.

Southern Union owns around 15,000 miles of natural gas pipeline stretching from Texas to Florida.

Energy Transfer does business very close to Southern Union’s Texas location, and the company believes it would be ideal to have access to the pipelines that fuel the Florida markets.

Energy Transfer has indicated, however, that the acquisition would force them to cut jobs, though it has not been indicated how extensive this cut would be.

If Williams comes back with a counter-offer, this bid battle will continue. Williams has the assets to do so.

But for the time being, Energy Transfer has offered Southern Union a much better deal.

That’s all for now,


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