Is Dresser-Rand Group Inc (NYSE:DRC) Ready to Merge With Sulzer AG To Cut Its Tax?

Boston, MA 09/18/2014 (wallstreetpr) – Turbine and compressor manufacturer, Dresser-Rand Inc (NYSE:DRC) has been a takeover candidate for quite some time with companies like General Electric Company (NYSE:GE) and Siemens AG (ADR) (OCTMKTS:SIEGY) showing interest in the past. The latest to join the list of interested parties is Switzerland-based Sulzer AG.

Merger Talks

The pump manufacturer, Sulzer, said to be in discussions with Dresser-Rand Group Inc (NYSE:DRC) to explore the possibility of a merger that would provide them expansion, Bloomberg reported. The potential merger would serve the customers in oil and gas segment thus establishing annual sales of $6.5 billion.

The deal, if come through, has the potential to provide the two companies a larger footprint since demand for energy services get bigger amidst drilling boom in shale rock in North America and other non-conventional oil and gas progress.

Sulzer has confirmed that it was involved in non-exclusive discussions with the American company for a possible merger deal. However, it refused to provide more light on the discussions except indicating that there was no guarantee that the present discussions would lead to the culmination of a transaction.

On market capitalization, Dresser-Rand was valued around $5.58 billion while Sulzer was worth around $4.58 billion or Swiss Francs4.31 billion. However, Dresser-Rand has refused to give its comment on the ongoing discussions for a merger.

Attractive Lower Tax

Gabelli & Co. analyst Justin Bergner told Bloomberg that the deal, if happened, would provide a lower tax rate assuming that the combined company’s residential base is in Switzerland. This could invite the wrath of the establishment, as well as, tax officials in the U.S.

The analyst believes that the merged entity would have the capability to market a bigger suite of products to the customers of oil and gas segments. He also thinks that it would start to address one of the possible sources of disadvantages of Dresser-Rand.

Morgan Stanley (NYSE:MS) has been working with Dresser-Rand Group Inc (NYSE:DRC) to advise the company on the possible takeover bids from companies, which included Siemens too.


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Published by Donna Fago

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