Houston-based Dresser-Rand Group Inc. agreed to be acquired by Siemens AG for an estimated $7.6 billion, including assumed debt, and will retain the group’s brand name, headquarters, and executive team. The developer of industrial and oilfield engines and compressors adds a new dimension to Siemens identity as an electrical engineering group.
The all-cash purchase, speculated about for several weeks, will pay Dresser shareholders a premium of 37.4% over the closing share price in mid July, when the proposed deal was first reported. General Electric, Siemens’ primary rival, and other groups were rumored to be considering bids for Dresser-Rand, too. Siemens and GE faced off earlier this year, too, during the pursuit of Alstom S.A., eventually won by GE with a $14-billion deal.
"As the premium brand in the global energy infrastructure markets, Dresser-Rand is a perfect fit for the Siemens portfolio,” stated Joe Kaeser, president and CEO of Siemens. “The combined activities will create a world-class provider for the growing oil and gas markets."
Siemens designs and develops electronic and electrical engineering systems for industrial, energy, and other markets. Dresser-Rand develops and manufactures rotating equipment for oil-and-gas and petrochemical processing, potentially giving Siemens a new point of entry in global energy markets.
While Dresser has manufacturing operations in the U.S., France, U.K., Spain, Germany, Norway, India, and Brazil, and global a network of 49 service and support centers covering over 150 countries, the particularly important prospect is that it will allow Siemens to take advantage of the fracking (hydraulic fracturing) activity that has grown expanded substantially in the past decade.
"Our aim is to become the leading rotating equipment and process system integrator for the oil and gas industry,” according to Lisa Davis, member of the managing board of Siemens. “Dresser-Rand has strong presence in oil and gas, a reputation for technology leadership and innovation, and a talented and experienced leadership team. Our intention is to leverage these strengths by maintaining the existing company and brand name and selectively moving complementary products and services from the existing Siemens portfolio into Dresser-Rand enabling us to offer a much broader range of products, services and solutions to meet our customers' needs.”
"Given the vision Siemens has for Dresser-Rand as its oil and gas company, and its expressed wishes to build Dresser-Rand's product and service portfolio with some of the existing Siemens offerings that have previously been marketed separately into the oil and gas space, it is clear that this is a transaction that should create value for clients, as well as for both sets of shareholders, that would not have otherwise been achieved had Dresser-Rand not become part of the Siemens group,” stated Dresser-Rand president and CEO Vincent R. Volpe Jr.
The takeover is expected to close next summer (2015), subject to Dresser-Rand shareholder approval, regulatory approval in the U.S., Europe, and certain other jurisdictions, and other customary closing conditions.