Dresser-Rand To Be Acquired By Siemens In $7.6 Bln Cash Deal

(RTTNews) - US oilfield equipment maker Dresser-Rand Group, Inc. (DRC) agreed Sunday to be acquired by German conglomerate Siemens AG (SIEGY) for $83.00 per share in an all-cash deal valued at about $7.6 billion, including assumed debt. The deal will create a combined entity that will be a leading world-class supplier to the oil and gas industry.

"As the premium brand in the global energy infrastructure markets, Dresser-Rand is a perfect fit for the Siemens portfolio. The combined activities will create a world-class provider for the growing oil and gas markets. With this Dresser-Rand will become 'The oil and gas' company within Siemens and fit right into our Siemens Vision 2020," Siemens President and CEO Joe Kaeser said in a statement.

Houston-based Dresser-Rand is a global supplier of compressors and turbines as well as aftermarket parts and services for the oil and gas industry, with a comprehensive portfolio of compressors, steam turbines, gas turbines and engines.

Siemens has been working with financial advisers to explore a potential deal with Dresser-Rand for the past one month. Meanwhile, Dresser-Rand had reportedly retained Morgan Stanley (MS) in August to assist in evaluating possible takeover bids.

Siemens quickly floated the bid after Swiss rival Sulzer AG (SULZF) confirmed Wednesday that it is in non-exclusive discussions with Dresser-Rand about a potential stock-for-stock merger. Reports over the weekend also revealed that U.S. conglomerate General Electric Corp. (GE) was in talks to launch a bid for Dresser-Rand.

The deal is seen as being part of Siemens' Vision 2020 which focuses on strengthening its core oil and gas business. It will boost and complements Siemens' offerings to the oil and gas industry and provide clients an enhanced product portfolio and wide range of mission critical rotating equipment and aftermarket solutions.

The deal, unanimously approved by Dresser-Rand's Board of Directors, is expected to close in the summer of 2015. The Supervisory Board of Siemens also approved the deal. The closure of the deal is primarily subject Dresser-Rand shareholder approval and other regulatory approvals.

Dresser-Rand noted that an additional per share cash consideration of $0.55 will be applied on the first day of each month starting March 1, 2015, until the closing occurs.

The base offer price of $83.00 per share represents a 37.4 percent premium over Dresser-Rand's unaffected closing share price of $60.42 on July 16, the day prior to market speculation on a potential bid by Siemens.

Dresser-Rand added that Siemens has committed to take all necessary steps from a regulatory perspective to ensure that the transaction will be completed.

Siemens said it plans to realize more than 150 million euros in annual synergies by 2019 as a result of the deal.

Following the closure of the deal, Dresser-Rand will become the platform for oil and gas equipment solutions within Siemens, which intends to retain the Dresser-Rand brand name and its executive leadership team.

Siemens said it will selectively move complementary products and services from the existing Siemens portfolio into Dresser-Rand, which will continue to be headquartered in Houston to maintain a significant presence there.

Dresser stated that the deal will give it the opportunity to continue its journey to become the premier supplier of high speed rotating equipment and solutions for this industry.

"Our aim is to become the leading rotating equipment and process system integrator for the oil and gas industry. Dresser-Rand has strong presence in oil and gas, a reputation for technology leadership and innovation, and a talented and experienced leadership team," said Lisa Davis, member of the Managing Board of Siemens AG.

Additionally, Dresser-Rand adopted a limited duration Shareholder Rights Plan, which will not in any way prevent or restrict any person from making a superior proposal. The rights are in the form of a dividend of one preferred stock purchase right on each outstanding share of the company's common stock as of the close of business on October 2, 2014.

DRC closed Friday's regular trading session at $79.91, up $6.88 or 9.42% on a volume of 12.20 million shares. The stock surged a further $2.76 or 3.45% in after-hours trading. Meanwhile, SIEGY closed at $124.00, down $2.40 or 1.90% on a volume of 0.12 million shares.