Siemens AG (ADR) (NYSE:SI) (FRA:SIE) (ETR:SIE) agreed to acquire U.S. oilfield equipment maker Dresser-Rand Group Inc. (NYSE:DRC) for $7.6 billion, paying $83 a share in cash.
The Munich-based company is shifting to the U.S. energy market, partly due to Germany’s strict controls over shale-gas exploration.
Siemens – Dresser-Rand cash takeover bid
German engineering company Siemens AG (ADR) (NYSE:SI) (FRA:SIE) (ETR:SIE) said in a statement it will acquire Dresser-Rand Group Inc. (NYSE:DRC) for $7.6 billion including debt. Siemens beat out Swiss rival Sulzer, which had been in talks with the U.S. oilfield equipment maker over a stock-based merger. However, the all-cash nature of the bid from Siemens likely proved decisive in striking a deal with the much smaller Dresser-Rand. While Siemens took in close to $97 billion in revenue last year, Dresser-Rand’s total revenue was $3 billion.
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Siemens AG (ADR) (NYSE:SI) (FRA:SIE) (ETR:SIE) chief executive officer Joe Kaeser said in a statement: “Dresser-Rand is a perfect fit for the Siemens portfolio”. He has been seeking more deals in the oil and gas industry after indicating that the Germany engineering company hadn’t made the most of the boom in shale gas extracted by hydraulic fracturing.
Exuding confidence over the deal, Vincent Volpe Jr., Dresser-Rand’s chief executive officer said the deal should create value for clients and both sets of shareholders.
Flurry of deals
With growing energy needs and a boom in unconventional oil, Dresser-Rand’s compressors and turbines have been attracting rivals and larger industrial conglomerates. The company, which has the largest installed base of compressors serving the energy industry, has been viewed as a takeover candidate for over a year.
Siemens AG (ADR) (NYSE:SI) (FRA:SIE) (ETR:SIE), Europe’s largest engineering company, has already spent $1.3 billion this year buying most of Rolls-Royce Holdings Plc’s energy business, which also makes gas turbines and compressors. Siemens has also agreed with Robert Bosch GmbH to acquire Siemens’ 50% stake in the joint venture BSH Bosch und Siemens Hausgerate GmbH.
Of note, citing people familiar with the developments, an earlier report from the Financial Times indicated General Electric Company (NYSE:GE) has also been in talks with Dresser-Rand.
In June the German group lost out in a bidding war with General Electric Company (NYSE:GE) for Alstom SA (EPA:ALO)’s energy assets.
Moreover, in December, Siemens AG (ADR) (NYSE:SI) (FRA:SIE) (ETR:SIE) announced it had procured an offshore wind project from private developer Cape Wind Associates, LLC for an undisclosed amount.