General Electric (GE) said Wednesday it will buy Dresser Inc., an energy infrastructure provider, for $3 billion. Unlike GE Capital, which today made its first deal in two years as it slowly recovers from the financial crisis, this is only GE Energy's latest in a series of deals and contracts. After promising shareholders that GE would focus on becoming an "industrial company first," this perhaps isn't surprising.
Addison, Tex.-based Dresser had revenues of $2 billion and earnings of $318 million in 2009. Dresser's portfolio includes technologies for gas engines, control and relief valves, measurement, regulation and control solutions for gas and fuel distribution.
"Dresser's technology complements our existing gas engine portfolio and adds offerings complementary to those of GE in the $45 billion flow technology industry, including product offerings in the highly engineered valve segment," said John Krenicki, chief executive of GE Energy in a statement.
GE is most excited about Dresser's gas engines, which it claims will give it "best in class, low-emissions, fuel-flexible mechanical-drive technology that can be applied to the small-scale compression segment for customers in the oil and gas sector." In addition, "Dresser also will further the development of GE Energy's monitoring, diagnostics and performance optimization offerings."
Dresser's portfolio will expand GE's core energy offerings and extend its reach into adjacent offerings, GE said. And with 85% of Dresser's revenue coming from energy customers, and 40% of its total revenue from aftermarket service offerings, "there is a lot of room for future expansion," Krenicki said.
"Dresser has a global franchise and brand with 60% of revenues outside of North America, which will be accelerated by GE's global footprint," Krenicki added.
GE's energy infrastructure generated over $37 billion in revenue in 2009 out of GE's $156.8 billion revenue, but its contribution to earnings was far more than a third.
Barclays Capital was GE's financial advisor on the deal. A closing date wasn't provided. Regulatory approval is pending.