Boston, MA 09/23/2014 (wallstreetpr) – In order make its position in the United States concrete, Germany-based Siemens AG (ADR) (OTCMKTS:SIEGY) agreed to acquire Dresser-Rand Group Inc. (NYSE:DRC) for an amount of $7.6 billion (all-cash). The acquisition of Dresser-Rand is seen as Siemens’ effort to compete aggressively with the General Electric Company (NYSE:GE) in rapidly growing shale gas market of the U.S. the acquisition is Germany’s industrial group’s largest one, in the history.
Siemens Weakest Region to be Cemented
The hold of Siemens AG (ADR) (OTCMKTS:SIEGY) in the U.S. market is lighter, which is why the acquisition will help the company in cementing the base, with a focus on the industrial customers. Siemens had also undertaken a corporate renovation, calling it Vision 2020, by making a strong foundation against better grossing rivals like ABB Ltd (ADR) (NYSE:ABB) of Switzerland and GE. Also, it had cut down the businesses associated with the cyclical consumers, having lower level of success rate.
The Analysts’ View
Acquisition of Dresser-Rand by Siemens AG (ADR) (OTCMKTS:SIEGY) is seen as something for which the latter has paid a higher amount. However, Jasko Terzic, an analyst at DZ Bank wrote that the deal would easily and comfortably fit into the portfolio of Siemens as it is looking forward towards expansion for strengthening gas and oil venture in the American market.
He also wrote in his research note that the deal has enabled Dresser-Rand to get an enterprise value of 16 times EBITDA. Comparing this with its peer, the others have the enterprise value of 8.5 times EBITDA.
Siemens’ Long Chase for Dresser-Rand
Dresser-Rand Group Inc. (NYSE:DRC) was on the mind of Siemens since long. However, it retracted from bidding for the former because of high valuation. But finally, it spurred into motion. GE, in the meanwhile, kept thinking all this while whether or not, it should bid for Dresser-Rand.
According to Reuters, the deal might be finalized and officially announced by the end of this week, i.e., by Sunday.
