According to people with knowledge of the matter, the biggest engineering company in Europe – Siemens AG – is considering to make an offer estimated to more than $6.5 billion for Dresser-Rand Group Inc. that could outgun an earlier bid by rival Sulzer AG.
One of the people, who asked not to be identified because the plans are still not public, reported that the supervisory board of the Germany-based company may vote on whether to submit a formal offer that amounts to more than $85 per share at a meeting scheduled for September 24th. Siemenss spokesman refused to make any comments on the information.
The people with knowledge of the matter said that a bid that amounts to more than $6 billion, or more than $80 apiece, would be found more attractive by Dresser-Rand in comparison to a previous offer by Sulzer AG. The US company, which produces compressors and turbines for the oil and gas industry, has been into the wish-list of Siemens for at least three years as CEO Joe Kaeser seeks more deals to capitalize on the shale gas boom.
Earlier this week Sulzer, which is headed by the former Chief Executive Officer of Siemens – Mr. Peter Loescher – said in a statement, which was cited by the Wall Street Journal that it is “in nonexclusive discussions with Dresser-Rand regarding a potential transaction”. The Swiss company refused to make any more further comments on its negotiations with Dresser-Rand.
London-based Bloomberg Intelligence analyst Heenal Patel said in a report, which was cited by Bloomberg: “A bid from Siemens may potentially have to be hostile as Dresser Rand’s management is engaged in talks with Sulzer about a possible agreed merger. A deal of this size would be Siemens’s largest foray into the oil and gas equipment space and second-largest on record after the $7 billion acquisition of Dade Behring in 2007.”
Moreover, General Electric is also considering whether to make a bid, the Financial Times reported, citing people familiar with the matter. GE has been in talks with Dresser-Rand, but it is yet unclear whether it will launch an offer. If it does, this would be the second multi-billion dollar deal over which GE takes Siemens head on in the last six months, following GEs $16.9 billion acquisition of Alstoms energy business in June.
Siemens AG fell by 1.45% on Friday in Frankfurt to close at €96.40 per share, marking a one year change of +6.72%. The company is valued at €84.93 billion. According to the Financial Times, the 28 analysts offering 12 month price targets for Siemens AG have a median target of €106.50, with a high estimate of €135.00 and a low estimate of €85.00. The median estimate represents a 10.48% increase from the last price of €96.40
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
