Siemens Set to Unveil Deal to Buy Dresser-Rand for Over $6 Billion Cash
Siemens Appears Set to Beat Out Swiss Rival Sulzer in Pursuit of U.S. Oil-Equipment Maker
German engineering giant Siemens AG is slated to announce as soon as Monday a multibillion-dollar deal to acquire U.S. oil-equipment maker Dresser-Rand Group Inc., a person familiar with the matter said Sunday.
Siemens is expected to pay more than $6 billion in cash, or more than $80 a share, for the Houston-based company, people familiar with the deal said.
Siemens appeared set to beat out Swiss rival Sulzer AG, which had been in talks with Dresser-Rand over a stock-based merger, these people said.
Siemens's all-cash bid likely proved decisive in reaching a deal with the much smaller Dresser-Rand, analysts suggested. Siemens took in close to 76 billion euros ($97 billion) in revenue in 2013, while Dresser-Rand's total revenue was $3 billion during the same period.
Reuters reported on Sunday that Siemens was close to completing an agreement to acquire Dresser-Rand.
The acquisition is in line with Siemens Chief Executive Joe Kaeser's aim of building up the company's presence in the U.S. energy market and capitalizing on the shale-gas boom.
Siemens produces gas turbines and supplies equipment for companies that extract natural gas. A merger with Dresser-Rand, which produces compressors, turbines and other rotating equipment, would allow Siemens to expand its gas-extraction capabilities and more directly profit from the hydraulic fracking movement in the U.S.
Siemens's large supply-chain network would enable it to harness Dresser-Rand's profitable business in spare parts and a "very high recurring stream of revenues," said Robert Norfleet, an analyst with Alembic Global who covers Dresser-Rand. At the same time, analysts say Dresser-Rand is poised to benefit from growing demand for compressors for offshore oil-production platforms spurred by expansion of the U.S. energy industry.
Siemens is one of a number of German industrial companies, including chemicals groups BASF SE and Wacker Chemie AG, shifting to the U.S. energy market, in part because of Germany's strict controls over shale-gas exploration.
Mr. Kaeser in May appointed American Lisa Davis to head Siemens's power business, which is being led for the first time from the U.S.
Siemens in May also bought most of British turbine maker Rolls-Royce Holdings PLC's civil energy operation for roughly $1.3 billion. The division has many customers in the oil-and-gas extraction industry.
In June, Siemens lost out to General Electric Co. on a bid for the energy assets of gas-turbine maker Alstom SA of France.