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Wellstream Lifts Oil Services on Takeover Approach

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Sept. 21 (Bloomberg) -- Wellstream Holdings Plc, a U.K. oilfield-services provider focused on Brazil, had its biggest ever gain in London trading after receiving a “number of preliminary approaches” from potential bidders.

Wellstream jumped 29 percent, the most since the shares were first sold in April 2007, to 785 pence as of the 4:30 p.m. close in London. That gave the Newcastle Upon Tyne, England-based company a market value of 780 million pounds ($1.2 billion). Rivals including John Wood Group Plc also rose.

“There can be no certainty that an acceptable offer will ultimately be made,” Wellstream said today in a statement.

The company said last month that its order backlog had risen to 246 million pounds and it forecast improved profit in the second half of the year. Demand for its pipelines and risers for underwater operations is likely to strengthen, and the Gulf of Mexico oil spill won’t hinder exploration, Wellstream said.

“The possible offers for Wellstream highlight the mergers and acquisitions potential for the oil service sector at this stage in the cyclical recovery,” said Keith Morris, a London-based analyst at Evolution Securities Ltd. Morris raised his recommendation for Wellstream to “buy” from “neutral” with a share-price target of 800 pence.

Saipem SpA, Europe’s largest oilfield-services provider, is a possible candidate to bid for Wellstream, according to analysts at Collins Stewart in London. A spokesman for Eni SpA, which owns 43 percent of Saipem, declined to comment.

The FTSE 350 Oil Equipment & Services Index was the biggest gainer in the broader benchmark, climbing 3.2 percent.

Wood Group added 6.6 percent, while Hunting Plc increased 3.1 percent.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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