An all cash deal is pending between Siemens AG (SIEGn.DE) and Dresser-Rand Group Inc (DRC.N) according to insiders with both companies. This move would expand Seimens as a major player in both oil and gas in North America.
In the deal, Seimens would get Dresser-Rand’s equipment such as turbines and compressors that serve the industry and just in time as drilling has called for more energy equipment and services. The deal would mean capitalization of $6 billion or more and might happen on Monday it’s said regarding the people familiar on the inside. At $80 per share, Seimen’s would be paying on the low and mid range. That’s above Dresser-Rand’s trading close of last Friday of $79.91. That price was due to the rumors about such an acquisition.
Although things look good, and the parties are still negotiating and the wait is on to see if the deal goes through. Speculation abounds and eyes are on the news waiting for confirmation of the deal to go through. Sulzer AG (SUN.S) which is one of Seimen’s competitors got trumped because of Seimen’s cash offer. It’s the hope of Siemens to combine both companies and have them housed in Switzerland. The attraction of Dresser-Rand has had Siemen’s on the fence for a long time and with the expansion of such technologies as fracking and new ones used to get natural gas from deep within the ground the temptation was too much. Thus this deal.
Because Dresser-Rand traded at around 24 times the 12 month forward earnings which is a 60% premium, Siemen’s was hesitant at first to jump into the waters. That high valuation of Dresser-Rand was the put off.
CEO of Siemen’s, Joe Kaeser knows the value of acquisitions and realized it bettered business all around. In May Siemens bought Rolls-Royce Holdings PLC (RR.L) at 785 million pounds or $1.28 billion.