General Electric ( GE), seeking to expand its presence in the oil and gas industry, agreed to buy drilling and oil equipment outfit Vetco Gray for $1.9 billion.

The giant conglomerate will acquire the business from private equity firms Candover, 3i and JPMorgan ( JPM) Partners.

Vetco Gray supplies drilling, completion and production equipment for on- and offshore oil and gas fields, including subsea applications. The business, which is expected to generate over $1.6 billion in sales in 2006, employs 5,000 people in more than 30 countries.

"This acquisition enables GE to seize faster growth in a rapidly expanding global business," said Claudi Santiago, CEO of GE Oil & Gas. "Vetco Gray expands the portfolio of products, services and solutions available to one of the world's most dynamic industries."

GE expects the deal to close early this year.

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