OLEAN, N.Y. — Dresser-Rand is under new ownership.
Officials at the Houston-based company announced late Sunday evening Siemens AG, a German engineering and electronics conglomerate, is purchasing the company in a deal valued at $7.6 billion.
In taking ownership of Dresser, the Munich-based Siemens will acquire all outstanding shares of the company’s common stock for $83 per share in cash, as well as all of Dresser’s debts. The sale price represents a premium of 37.4 percent over Dresser-Rand’s closing share price on July 16, the day before speculation in the press appeared regarding interest in Dresser-Rand.
“After a thorough and competitive process, we are pleased to have reached this agreement with Siemens as it maximizes value and delivers significant benefits to all Dresser-Rand stakeholders,” said Vincent R. Volpe Jr., Dresser-Rand’s president and chief executive officer in a press release.
“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.
“… Simply stated, we see this as a unique opportunity to better serve our clients, employees and shareholders and are pleased to have Dresser-Rand placed in the central role for Siemens as it develops its position in oil and gas.”
Dresser has 13 manufacturing facilities in eight countries, and maintains a network of 49 service and support centers covering more than 150 countries. The company’s total employment is 7,200 employees.
Locally, the compressor and turbine manufacturer has operations in Olean, Wellsville and Painted Post with a combined workforce of 2,220.
Around half of those employees work in Olean.
For John Baglione, president of the United Steelworkers Local 4601 — the only union at the Olean plant, representing 560 workers — exactly what that vision is and how the Olean facility will play into it remains to be seen.
“I have more questions than I do answers,” said Baglione. “They’re (Siemens) a German-based company that we are really unfamiliar with. Technically, they don’t have to recognize our union, honor our contract we just negotiated this past June, or keep us open. We’re really in the dark as much as anyone else is. It’ll just have to be a ‘wait and see.’”
What impact the sale will have on local plants is unclear, though Siemens’ officials say their company intends to operate Dresser-Rand as its oil and gas business retaining the Dresser-Rand brand name and its executive leadership team. In addition, Siemens plans to maintain a significant presence in Houston, which will be the headquarters location of the oil and gas business of Siemens.
“As the premium brand in the global energy infrastructure markets, Dresser-Rand is a perfect fit for the Siemens portfolio,” said Joe Kaeser, president and CEO of Siemens AG. “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’ purchase of the compressor and turbine maker isn’t exactly a surprise, though Sunday’s announcement was unexpected.
Rumors of the purchase began circulating in July after Manager Magazin, a German publication, reported July 17 Siemens was preparing an offer for the company — one that had been in development for months.
The publication also reported Kaeser had mandated an offer for Dresser, which had a market value of $4.6 billion at that time, and would consider a hostile takeover if necessary.
According to other media outlets, a former Siemens CEO approached Dresser about two years ago and was turned away by Volpe. When Kaeser became Siemens’ CEO, he put efforts to prepare an offer for Dresser-Rand on hold while the German group entered into a bidding war for the France-based Alstom Energy Group’s energy assets. The bidding war ended in June as France chose General Electric.
When news broke of Siemens’ renewed efforts to obtain the compressor and turbine maker, Dresser’s stock surged up 19 percent, with shares trading for more than $70. Siemens stock, however, went down.
Dresser’s stock again went up Friday by 9.4 percent, trading at almost $80 a share. Siemens’ stock went down about 75 cents to $96.72.
“We watched Dresser’s stock going up and all the shares being traded,” Baglione said. “Everything seemed to be in the works, we just didn’t know how long it was going take.”
Siemen’s purchase of Dresser won’t be final until at least the summer of 2015. Dresser’s sale will require approval of its shareholders and the United States and European governments.
