By Christopher Alessi
Siemens AG has no plans to walk away from a planned deal to
acquire U.S. oil equipment manufacturer Dresser-Rand Group Inc.,
despite the slide in oil prices, Chief Executive Joe Kaeser said on
Tuesday.
Falling oil prices reflect supply rather than demand, "which is
an encouraging sign this is all temporary," he added. U.S. oil
prices ended 4.2% lower on Monday at $63.05 a barrel, the lowest
level since July 16, 2009.
In addition, the acquisition of the Houston-based company in a
cash deal valued at $7.6 billion, including debt, should deliver
bigger-than-expected cost savings and revenue gains for the German
engineering group, Mr. Kaeser said.
"If we walked away from that deal, you would see a lot of happy
competitors," Mr. Kaeser said at an event for financial analysts in
Berlin.
Dresser-Rand's installed customer base would allow Siemens to
achieve synergies 30% higher than initially announced, Mr. Kaeser
said.
In September, Siemens said it expected to achieve EUR150 million
($185 million) in annual synergies by 2019 as a result of the deal,
which is expected to close in summer 2015. Dresser-Rand
manufactures compressors, gas turbines and engines.
Siemens foresees the potential for more "cross selling" between
the two companies, including offering Dresser-Rand's high-speed
engines to Siemens's existing customer base, said managing board
member Lisa Davis.
Dresser-Rand also provides Siemens with "great technology" and a
"strong foothold" in the liquefied natural gas business, Ms. Davis
said.
A former manager at Royal Dutch Shell PLC and an American, Ms.
Davis has been leading Siemens's energy businesses out of Houston
since May.
The Dresser-Rand acquisition is part of Mr. Kaeser's broader
strategy to expand the company's energy operations and capitalize
on America's growing energy sector, which is riding the shale-gas
boom.
Siemens announced in May plans to buy U.K.-based Rolls-Royce
Holdings PLC's civilian energy operations for $1.3 billion. That
deal closed earlier this month.
Write to Christopher Alessi at christopher.alessi@wsj.com
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