GE will have to pay around £3bn for the UK well-flow management group in a deal expected to go through later this year.
Such a move will see GE become one of the big worldwide players in the service industry.
There was media speculation earlier this month that Aberdeen-based Expro could be either sold or floated on the London Stock Exchange, but a city source told SEN this week that a cash deal with GE was the most likely outcome.
Second time around
It will be the second time in six years that Expro has changed hands. In 2008, when it was a listed firm, it was sold for about £1.8bn in a deal involving private-equity firms.
Expro is currently owned by Arle Capital Partners, Goldman Sachs Capital Partners and AlpInvest Partners. The source said Expro was currently carrying considerable debt which was impacting its bottom line, while a trade sale would generate the best return for the current owners.
GE could yet face rival bids for the target with Halliburton and Baker Hughes being the most obvious contenders.
‘In addition, you could not rule out completely the possibility of a reckless offer from other private-equity firms, but I think those days are gone. GEOG has the deepest pockets and it could outbid any other interested parties,’ said the source.
GEOG is also not likely to encounter any competition issues in the takeover.
The source told SEN, ‘Although GE does already own another Aberdeen oil service company in Vetco Gray, the two would be complementary - there is no real overlap. Expro is one of the last big independents in the market and taking it over would be transformational for an acquirer. Buying Expro would see GE finally joining in properly in the worldwide oil and gas service business.’
‘Expro would give them a global platform to launch a full-blown operation. This would push them into the same league as Halliburton, Schlumberger, Baker Hughes and Weatherford,’ the source said.
Halliburton previously made an unsuccessful move for Expro at the time of its private-equity acquisition.
Expro’s latest accounts show net debt as $1.89bn at the end of last September. Operating profits in the six months to 30 September 30 were $92.5mn, but after net finance costs of $108.5mn, losses after tax were $30.2million.
Regarding the outlook, the firm said at the time of the interim results that its performance continued to be encouraging.
Adjusted revenue in the quarter to September 30 was 12.8% higher compared to the same quarter in the prior year, on a constant-currency basis.
The company said, ‘As regards the next six months, the group remains cautiously optimistic and expects to see a continued improvement in performance, reflecting the continued strengthening in the international oil and gas sector and the benefits of our capital-expenditure programme. This anticipated near-term improvement is, however, subject to the timing of significant offshore...developments, which in turn are subject to the decision-making processes of both international and national oil companies.’
In the longer term, Expro said it continued to believe it had excellent growth prospects.
Expro was set up in Great Yarmouth in 1973 and produced the first UK oil from the Argyll field on 11 June 1975. Since then, its services have grown around the world and it now employs 5,000 people in 50 countries. The source did not think a GE takeover would have any negative impact on jobs.
‘Due to skill shortages, companies are reluctant to shed staff. Greater investment in Expro by GE could even lead to more jobs. GE would also give Expro financial and strategic stability,’ he added.
Expro provides services and products that measure, improve, control and process flow from high-value oil and gas wells, from exploration and appraisal through to mature field production optimisation and enhancement.
The financial firepower available to GE is obvious by a glance at its 2013 accounts - net earnings of $14.1bn from revenues of $146bn.