Weatherford International Ltd. climbed the most in almost three months after General Electric Co. agreed to buy Lufkin Industries Inc., another provider of oilfield services, for about $3.3 billion.
Weatherford, based in Geneva, rose 3.7 percent to $12.49 at the close in New York, the biggest increase since Jan. 18. The gain was the largest in the Bloomberg Americas Oil & Gas Services Index after Lufkin, which GE agreed to buy for a 38 percent premium to its April 5 closing price.
Lufkin and Weatherford make up about 80 percent of the U.S. market for rod-lift systems, which help pull oil out of existing wells that lose pressure over time, J. David Anderson, a New York-based analyst for JPMorgan Chase & Co. who rates the company the equivalent of a buy, wrote in a note to investors today.
With tax issues mostly resolved, Weatherford is still undergoing an investigation under the Foreign Corrupt Practices Act, “the main impediment for an acquisition or for activists to get involved in this stock,” Anderson wrote. “Our understanding is a mid-year resolution with the Department of Justice is increasingly likely, at which time we believe a takeover valuation premium is likely to develop.”