Germany's Siemens said its $83 per-share bid was unanimously
supported by Dresser-Rand's board of directors. That compares with a
Friday closing price of $79.91, which was up 27 percent over the
past three months on takeover speculation.
Within minutes of that statement, it also announced the sale of its
50 percent stake in BSH Bosch und Siemens Hausgeraete GmbH to joint
venture partner Robert Bosch GmbH for 3 billion euros ($3.85
billion), ending their more than 45 year alliance in household
"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," Siemens Chief Executive Joe Kaeser
said in a statement on Monday.
Reuters reported on Sunday that the companies were nearing a deal.
The German industrial conglomerate had long coveted Dresser-Rand,
which would help it grow its oil and gas business at a time when a
North American fracking boom is boosting demand for energy
But it shrank in the past from making a formal bid, balking at its
high valuation. Dresser-Rand trades at 24.6 times 12 month forward
earnings, a 60 percent premium to its peers in oil and gas equipment
and services, according to Reuters data.
CEO Kaeser said in July the company planned to focus on
restructuring rather than acquisitions for the moment, but would
have the financial firepower for the right acquisition target. Cash
reserves stood at 8.21 billion euros at the end of June.
Siemens is targeting more than 150 million euros in annual synergies
by 2019 from the transaction, which complements Siemens's market
position in turbo compressors, downstream and industrial
applications as well as larger-sized steam turbines.
Siemens expects to close the Dresser-Rand deal by summer 2015, while
it aims to wrap up the sale of its stake in household appliance
venture BSH with Bosch in first half of 2015.
BSH will pay out 250 million euros to each of its owners Bosch and
Siemens before the transaction is completed.
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Siemens has trumped a competing offer for Dresser-Rand from Swiss
pump maker Sulzer AG , which had proposed an all-stock merger,
according to people familiar with the matter.
Sulzer's chairman is former Siemens CEO Peter Loescher, who Kaeser
replaced in a boardroom coup last year.
But other rival bidders may be lurking. General Electric was
considering whether to make a bid, the Financial Times cited people
familiar with the matter as saying on Friday.
Any GE involvement would mean their archrivalry picking up steam
again. Siemens lost out to GE in a fierce bidding tussle over
Alstom's energy business in June.
The Dresser-Rand deal would eclipse Siemens acquisitions over recent
year. Siemens bought Dade Behring for $7 billion under Kaeser's
predecessor Loescher in 2007, in a deal that was widely criticized
Siemens filled another gap in its energy equipment portfolio earlier
this year, buying small gas-turbine assets from Rolls-Royce <RR.L>
for 950 million euros. CEO Kaeser indicated at the time that
expansion in the United States was next on the agenda.
(This version of the story was refiled to correct typographical
error in paragraph 17)
(Editing by Sandra Maler)
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