Siemens has agreed to buy US oilfield equipment maker Dresser-Rand for $7.6bn (£4.7bn), as it seeks to increase its stake in the booming US shale gas market.
The deal is one of the biggest in the history of the German industrial group and will strengthen Siemens' position in the US, its weakest region, and focus the group more tightly on its industrial customers.
The move is part of the company’s "Vision 2020" corporate overhaul launched in May as it seeks to make up ground on more profitable competitors such as Switzerland's ABB and US-based General Electric (GE).
The restructure also includes reducing the groups stake in the consumer market where it has had limited success and as part of that drive Siemen’s also announced that it has agreed to sell its stake in household appliances joint venture BSH to partner Robert Bosch, bringing in €3bn (£2.4bn) to help finance the Dresser-Rand deal.
"The Dresser-Rand offer is high but can be justified in our view due to the very good fit into Siemens target to strengthen the US and oil and gas business," DZ Bank analyst Jasko Terzic wrote in a research note.
A booming US shale gas market has driven a surge in investment by energy companies, creating demand for the compressors and turbines made by companies such as Dresser-Rand.
Annual capital expenditure on oil, gas and coal has more than doubled in real terms since 2000 and surpassed $950bn in 2013, according to the International Energy Agency.
Siemens' US energy business made €3.7bn of revenues in its last fiscal year, compared with the roughly $20bn generated by GE's US operations in oil and gas alone.
The German company has reportedly long coveted Dresser-Rand, but had been put off by its high valuation until an all-stock merger proposal from Swiss pump maker Sulzer AG spurred it into action, according to people familiar with the matter.
Sulzer said today it had ended its talks with Dresser-Rand, but some analysts said there was still a chance of a rival emerging to challenge Siemens' offer. Siemens said its bid was unanimously supported by Dresser-Rand's board of directors.
"As the premium brand in the global energy infrastructure markets, Dresser-Rand is a perfect fit for the Siemens portfolio," Siemens chief executive Joe Kaeser said.
Siemens said it was aiming for more than €150m in annual synergies by 2019 from the Dresser-Rand transaction, which complements its business in turbo compressors, downstream and industrial applications as well as larger steam turbines.]
The German group expects to close the deal by summer 2015, while it aims to wrap up the sale of its stake in BSH in first half of 2015, ending a more than 45 year alliance in household appliances.
Siemens filled another gap in its energy equipment portfolio earlier this year, buying small gas-turbine assets from Rolls-Royce for €950m and Kaeser indicated at the time that expansion in the US was next on the agenda.