Current DRC Stock Info

On September 22, 2014, Siemens (ticker: SIE), an $84 billion market cap engineering and electronics conglomerate based in Germany, announced the acquisition of Dresser-Rand (ticker: DRC) for $7.6 billion (Euros). Dresser-Rand is one of the world’s largest equipment suppliers in the oil and gas industry and specializes in rotating equipment solutions. The deal involves $6.4 billion in cash and the assumption of Dresser-Rand’s debt, which is $1.2 billion. Siemens hopes to close the transaction in summer of 2015.

Dresser-Rand will retain its na...

Analyst Commentary

Capital One Securities (9/22/14)



Definitive merger agreement reached w/ Siemens. After nearly a quarter of being in utterly untouchable limbo we can now mercifully take the stock behind the barn and put it down. All-cash transaction valued at $7.6B (including assumption of ~$1.2B in DRC debt) or $83/share. Deal is expected to close in the summer of 2015. Additional per-share cash consideration of $0.55 will be applied on the first day of each month starting March 1, 2015, until closing occurs. Siemens will operate DRC as the company's oil and gas business utilizing the Dresser-Rand brand name, and apparently it will also retain the executive leadership team and Houston presence. Deal follows media reports of competing bidder Sulzer, which had indicated it had entered into discussions w/ DRC regarding a potential transaction early last week, and the mid July initial reports of potential Siemens interest/discussions. As indicated previously it's been a tiresome exercise over this period w/ underlying stand-alone DRC worth low $50s in our view w/ pedestrian low-double-digit % y/y EBITDA growth, continued working capital headwinds, and yet another upcoming round of unachievable 4Q guidance/downward forward year estimate revisions. Yet, w/ assumed synergies and the removal of corporate costs a defensible $75 - $85 takeout valuation hovered in the background and has now finally come to fruition.  


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