Sulzer CEO Weighs Transformational Deal After Dresser-RandPatrick Winters
Sulzer AG sees further opportunities to buy or merge with companies producing equipment for the oil and gas industry after a proposed merger with Dresser-Rand Group Inc. failed, its chief executive said.
Sulzer would fit better with another major global company producing pumps or other flow control equipment since merging its services operations and redefining its market approach, Chief Executive Officer Klaus Stahlmann said in a phone interview. Sulzer’s offer of a merger of equals with Dresser-Rand was beaten by Siemens AG’s $7.6 billion cash bid.
“I have more opportunities like Dresser-Rand, in the space which we can look at,” Stahlmann said. “There’s not 100s of companies of a similar size for a merger, but there are a couple. What is clear is that we would still prefer to look at the flow control, oil and gas space.”
Stahlmann, in his third year at the helm, wants to deploy cash from the $1.06 billion sale of a coatings unit earlier this year. Backed by Russian billionaire shareholder Viktor Vekselberg, with his delegate ex-Siemens chief Peter Loescher on the board, Sulzer has cash and motivation to complete a transformational deal. During negotiations to merge with Dresser-Rand, Vekselberg’s Renova industrial holding company built up a 5 percent stake, worth about $300 million.
Sulzer, based in Winterthur, today cut full-year estimates for order intake, sales and operating income before restructuring and adjusted for currencies and acquisitions, as oil companies delay equipment orders.
Stahlmann said he expects the orders to be booked next year.
“It’s always a best guestimate if this will happen in six or nine months but they will need to invest at some point in time,” he said.