Global Hunter Securities Gives Color On Dresser-Rand Group; Increases PT To $51

Dresser-Rand Group DRC has agreed to acquire Grupo Guascor for $690MM in a cash and stock transaction likely to close in 2Q. The deal should provide immediate accretion while integrated compressor and power generation systems can be offered through additional channels

GG also now gives DRC a platform for growth into Renewables. Given the additional leverage for the deal which we anticipate upon integration, enhanced operational cash flow going forward will likely be applied to reduce outstanding debt.

Dresser-Rand announced its acquisition of Grupo Guascor for $690MM in stock and cash. The deal will consist of $283MM in cash and 5 million DRC shares. Notably, DRC also plans to repurchase an equivalent number of shares from existing shareholders making the deal a synthetic cash transaction. GG is based in Spain and is a leading supplier of diesel and gas engines supporting global energy markets. Additionally, GG has an environmental presence with experience in bio-energy technology.

Global Hunter Securities has a Neutral rating on DRC

DRC closed Monday at $53.11