General Electric Co reached a deal to buy Wellstream Holdings Plc by raising its bid for the British oil drilling pipemaker by 6 percent to 800 million pounds ($1.3 billion).
The agreement is the latest in a series by the largest U.S. conglomerate to boost its presence in the oil services sector and shows that, despite the BP spill in the Gulf of Mexico this summer, the industry expects deepwater drilling to continue apace.
The acquisition would also give GE a strong footing in Brazil, where Wellstream has a manufacturing plant.
Brazil has made a series of multibillion barrels oil discoveries in recent years in very deep water -- areas that are traditionally expensive for oil producers and a major opportunity for equipment makers.
GE will pay 780 pence in cash plus a special dividend of 6 pence per Wellstream share, the companies said in a joint statement on Monday. Wellstream rejected an earlier bid of 750 pence per share from GE, the U.S. conglomerate said in October.
GE has said it could spend up to $30 billion on takeovers in the coming years as Chief Executive Officer Jeff Immelt renews the company's focus on heavy manufacturing after reaching a deal to sell its media unit and deciding to scale back the GE Capital finance arm.
Immelt has said energy will be a major area of focus for the company, the world's largest maker of jet engines and electric turbines.
Wellstream is one of only three main manufacturers of flexible riser pipes, which connect drilling rigs to well-heads on the sea floor.
The other two manufacturers are France's Technip and Italy's Prysmian, although other companies make rigid risers, a rival technology.
Shares of Wellstream traded up 5.4 percent at 787 pence, suggesting investors did not expect a rival bid to emerge, while GE gained 0.7 percent to $17.85 in premarket trading.
Wellstream said in September it had received a number of approaches.
Energy services has been one of GE's fastest growing divisions, partly because of acquisitions.
In October, GE reached a $3 billion deal to buy Dresser Inc, a maker of gas engines used to power oil and natural gas production equipment.
Rivals have also been busy snapping up smaller players.
On Monday, Wood Group said it would acquire unlisted Aberdeen-based rival PSN for $955 million, including $325 million of debt, in the latest in a long line of acquisitions by the UK oilfield services provider.
Besides cost savings from such consolidation, analysts say the typically big oil companies that operate in deep water prefer to deal with larger service providers that offer a broad range of services.
Investment banks Credit Suisse and Rothschild advised Wellstream, while Goldman Sachs advised GE.
(Additional reporting by Scott Malone in Boston and Sakthi Prasad in Bangalore; Editing by David Holmes and Lisa Von Ahn)