The deal, which must be approved by Wood Group's shareholders, is expected to close later in the year. It's another in a string of acquisitions for the oil and gas unit as it moves to expand in a growing market for drilling and transporting equipment.
Wood Group's well support division makes electric submersible pumps, wellhead pressure control systems and information logging systems.
The acquisition gives GE an entry into the fast-growing market for equipment to recover oil from mature fields. It also expands GE's products into unconventional oil and gas production including shale gas, the statement said.
With the acquisition, GE gets access to Wood Group's technology to make pumps that work under water, a market that is sure to expand in future years as oil producers try to get more oil out of existing well fields, said John Krenicki, a GE vice chairman and CEO of the company's energy business, which includes the oil and gas division.
Currently, two-thirds of the world's oil production comes from giant oil fields where oil companies have tapped only a third of the reserves, Krenicki said in an interview with The Associated Press Sunday night.
"With electric submersible pumps, you can squeeze more out of these wells," he said.
The deal also bolsters GE's position in the rapidly expanding equipment market for unconventional oil and gas production, which is expected to account for 35 percent of the increase in global supply and 10 percent of the world's oil demand by 2035, GE said.
Wood Group's well support division also makes products such as high-tech control valves and pressure control systems that safely get natural gas from shale to pipelines that are made by GE, Krenicki said.
Wood Group's well support division has 3,800 employees and more than 20 factories and service centers across the world. Last year it reported $947 million in revenue and earnings before interest, taxes, depreciation and amortization of $166 million. Revenue grew 16 percent last year over 2009, and the division has averaged 13 percent revenue growth over the past decade, the statement said.
GE expects the division to generate $1.1 billion in revenue this year.
Wood Group's board intends to unanimously recommend the deal to its shareholders, according to the statement. Wood Group's U.S. headquarters is in Houston. Its parent company, John Wood Group PLC, is based in Aberdeen, Scotland.
Krenicki said GE now has the pieces it needs to grow its oil and gas business, and few changes are expected at the Wood Group operations. "For the medium term, we're in execution mode now," he said.
GE, he said, has 15,000 engineers in its energy operations and can bring significant research and development resources to Wood Group, he said.
The acquisition is the latest in a series of purchases for GE's oil and gas unit. In December the company said it would buy U.K. oil and gas services company Wellstream Holdings for $1.3 billion.
The Wellstream deal helps GE boost its energy services business and tap into what is expected to be strong growth in drilling for oil in deep waters around the globe. Wellstream makes equipment like flexible risers and so-called flow-line products that help gather oil pumped from deep under the sea and send it to shore.
Wellstream has a strong presence in Brazil, where Brazilian oil giant Petrobras and others are preparing for a massive increase in production from recently discovered fields in the ocean south of Rio de Janeiro.
GE is headquartered in Fairfield, Conn.