GE (GE) Mulling Bid for Dresser-Rand Group (DRC), Report

Siemens’ (OTC:SIEGY) plans to acquire the US-based oilfield equipment manufacturer Dresser-Rand (DRC) for $6.1B, or $80/share, became less clear Friday. According to a report from the Financial Times, General Electric (GE) is also in talks with Dresser-Rand Group, weighing the possibility of a bid.

It is yet unclear if GE will make an acquisition offer, the report said, citing people familiar with the matter. But if it does, this could lead to another bidding war between the two conglomerates. As recently as June, Siemens’ $6.39 billion offer for the energy businesses of Paris-based Alstom was beaten by GE’s $11.37 billion proposition.

Separately, Zurich-based Sulzer AG (SULZF) confirmed earlier this week that it is in ‘non-exclusive’ talks with Dresser-Rand regarding a potential transaction. DRC, with a market cap of nearly $6.12B after shares rose nearly 13% percent on Friday at $82.67, has a larger market value than Sulzer, which is worth around $4.5B.

Dresser-Rand shares are currently priced at 40.38x this year’s forecasted earnings compared to the industry’s 15.55x earnings multiple. Ticker has a PEG and forward P/E ratio of 1.81 and 25.61, respectively. Price-to-sales for the same period is 2.01 while EPS is $1.98. Currently, Dresser-Rand has a median Wall Street price target of $67.00 with a high target of $100.00.

In the past 52 weeks, shares of Houston, Texas-based company have traded between a low of $51.46 and a high of $82.50 and are now at $79.91. Shares are up 28.82% year-over-year and 34% year-to-date.

The chart below shows where the equity has traded over the last year, with the 50-day and 200-day moving averages included.

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