Industrial conglomerate Siemens AG said yesterday it would buy US oilfield equipment maker Dresser-Rand Group Inc. for $7.6 billion in a move that would significantly boost the German company’s oil and gas business in North America.

Germany’s Siemens said its $83 per-share bid was unanimously supported by Dresser-Rand’s board of directors. That compares with a Friday closing price of $79.91, which was up 27 per cent over the past three months on takeover speculation.

Within minutes of that statement, it also announced the sale of its 50 percent stake in BSH Bosch und Siemens Hausgeraete GmbH to joint venture partner Robert Bosch GmbH for €3 billion, ending their more than 45-year alliance in household appliances.

“As the premium brand in the global energy infrastructure markets, Dresser-Rand is a perfect fit for the Siemens portfolio. The combined activities will create a world-class provider for the growing oil and gas markets,” Siemens chief executive officer Joe Kaeser said in a statement.

The German industrial conglomerate had long coveted Dresser-Rand, which would help it grow its oil and gas business at a time when a North American fracking boom is boosting demand for energy equipment.

But it shrank in the past from making a formal bid, balking at its high valuation. Dresser-Rand trades at 24.6 times 12-month forward earnings, a 60 per cent premium to its peers in oil and gas equipment and services, according to Reuters data.

CEO Kaeser said in July the company planned to focus on restructuring rather than acquisitions for the moment, but would have the financial firepower for the right acquisition target. Cash reserves stood at €8.21 billion at the end of June.

Siemens is targeting more than €150 million in annual synergies by 2019 from the transaction, which complements Siemens’s market position in turbo compressors, downstream and industrial applications as well as larger-sized steam turbines.

Siemens expects to close the Dresser-Rand deal by summer 2015, while it aims to wrap up the sale of its stake in household appliance venture BSH with Bosch in first half of 2015.

BSH will pay out €250 million to each of its owners Bosch and Siemens before the transaction is completed.

The combined activities will create a world-class provider for the growing oil and gas markets

Siemens has trumped a competing offer for Dresser-Rand from Swiss pump maker Sulzer AG, which had proposed an all-stock merger, according to people familiar with the matter.

Sulzer’s chairman is former Siemens CEO Peter Loescher, who Kaeser replaced in a boardroom coup last year.

But other rival bidders may be lurking. General Electric was considering whether to make a bid, the Financial Times cited people familiar with the matter as saying. Any GE involvement would mean their archrivalry picking up steam again. Siemens lost out to GE in a fierce bidding tussle over Alstom’s energy business in June.

The Dresser-Rand deal would eclipse Siemens acquisitions over recent year. Siemens bought Dade Behring for $7 billion under Kaeser’s predecessor Loescher in 2007, in a deal that was widely criticised as overpriced.

Siemens filled another gap in its energy equipment portfolio earlier this year, buying small gas-turbine assets from Rolls-Royce for €950 million. CEO Kaeser indicated at the time that expansion in the US was next on the agenda.

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