Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

National Oilwell Sticks to Knitting as New CEO Seeks M&A

Don't Miss Out —
Follow us on:

March 25 (Bloomberg) -- National Oilwell Varco Inc., the oil-field equipment maker that has spent at least $1 billion a year on deals, expects acquisitions to continue as its newly minted chief executive reorganizes units and prepares a spinoff.

The manufacturer, whose three in-house dealmakers execute three to four acquisitions a quarter mostly in the range of $5 million to $20 million a piece, is winning one for every seven or eight it’s going after, Chief Executive Officer Clay Williams said in an interview. The remaining aren’t closed because sellers expect prices that can’t be worked out or a competitor such as General Electric Co. wins out, he said.

“Our M&A strategy has been sustained for many, many years,” Williams, who oversaw acquisitions at Varco Inc. before it was bought in 2004 by National Oilwell Inc. for $3 billion, said late yesterday during the Howard Weil Energy Conference in New Orleans. “We’re sticking to our knitting.”

Williams, who took over the top job at the largest U.S. maker of oil-field equipment sooner than expected last month, is increasing the number of financial reporting divisions to four from three. He replaced Pete Miller, who’ll remain as chairman of the Houston-based company until its distribution business is completely spun off. The plan to turn the unit into a stand-alone, publicly traded company was announced in September.

Over the next two years, the company may generate $2.8 billion in free cash that can be returned to shareholders through dividend increases or spent on deals, analysts from Raymond James & Associates Inc. including J. Marshall Adkins wrote in a Jan. 31 note to investors.

Grant Prideco

National Oilwell Varco’s largest deal was buying Grant Prideco Inc. in 2007 for about $7 billion in cash. The company, which has 25 buy ratings from analysts, 10 holds and one sell, makes oil-field gear ranging from blowout prevention equipment for offshore wells to complete land rigs.

“We put a lot of energy in smaller transactions,” he said. “There’s frequently terrific value in those businesses.”

The company has spent at least $1 billion on acquisitions in each of the past three years, according to company filings.

To contact the reporter on this story: David Wethe in Houston at dwethe@bloomberg.net

To contact the editors responsible for this story: Susan Warren at susanwarren@bloomberg.net Carlos Caminada, Keith Gosman

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.