Ingersoll Rand To Buy Cameron's Centrifugal Compression Division For $850 Mln

(RTTNews) - Diversified industrial company Ingersoll-Rand Plc (IR) Monday said it has agreed to acquire the assets of Cameron International Corp.'s (CAM) Centrifugal Compression division for $850 million.

Michael Lamach, chairman and chief executive officer of Ingersoll Rand stated that the acquisition will expand the firm's Industrial segment and will be immediately accretive to earnings per share, EBITDA margins and ROIC.

Cameron is a provider of flow equipment products. The division provides centrifugal compression equipment and aftermarket parts and services for industrial applications, air separation, gas transmission and process gas.

Following the deal closure, Ingersoll Rand would welcome the Turbo-Air and MSG brands into the Ingersoll Rand family of brands.

The Centrifugal Compression division, with about 850 employees and operating from 12 global locations, generated sales of about $400 million in 2013. The acquisition is expected to close before the end of the year, subject to regulatory approval.

Ingersoll Rand plans to fund the acquisition through a combination of cash on hand and debt.

Separately, Cameron said it expects after-tax proceeds from the sale of the Centrifugal Compression business to be about $600 million, and projects the net proceeds to support stock buybacks.

According to Cameron, its decision to divest the division was made after a careful review of long-term business strategy to increase its focus on its core markets.

The firm also noted that the results of operations of the business will be reported as discontinued operations beginning in the third quarter of 2014.

In late July, while reporting its second quarter results, Cameron had said its Drilling & production systems revenue grew 32 percent, while valves & measurement revenues edged up slightly. Process & compression systems revenues declined 15 percent from last year.

Ingersoll-Rand shares closed Friday's regular trading at $60.55 on the NYSE, while Cameron ended at $72.63.