HOUSTON, Jan. 20, 2014 /PRNewswire/ -- Cameron (NYSE: CAM) today announced that it has entered into a definitive agreement under which it will sell its Reciprocating Compression business to GE (NYSE:GE) for cash consideration of approximately $550 million, subject to closing adjustments. Cameron also announced that it intends to explore strategic alternatives for its Centrifugal Compression business to further enhance the Company's focus on its core businesses. The Company intends to use the net cash realized from the divestiture of the Reciprocating Compression business to partially fund its existing share repurchase program.
Jack Moore, Cameron Chairman, President and Chief Executive Officer stated, "These actions will streamline the Company's operations and are consistent with our strategy of building on our strong sales and order momentum in our core markets while selectively expanding product and service offerings in strategic growth areas. The proceeds from the transaction will provide us with greater financial flexibility and afford us the opportunity to drive additional value for our shareholders."
Mr. Moore continued, "Exploring strategic alternatives for the Centrifugal Compression business is part of our ongoing effort to optimize our asset base with a focus on our core markets. We are committed to directing resources to businesses where we have the best opportunities to achieve sales growth, higher margins and market leadership."
Cameron expects to complete the sale of its Reciprocating Compression business during the third quarter. As a result of this transaction, the Company expects to recognize an after-tax loss of approximately $100 million for financial reporting purposes, reflecting the write-off of non-deductible goodwill. The majority of this loss will be reflected in the Company's first quarter results in the caption entitled "Other Costs". The Company estimates after tax proceeds from the sale of approximately $400 million.
The results of operations of the Reciprocating Compression business will be reported as discontinued operations beginning in the first quarter of 2014. The Reciprocating Compression business had sales of $355 million for the year ended December 31, 2012.The Company will continue to report the results of operations for its Centrifugal Compression business in continuing operations. The Centrifugal Compression business had sales of $365 million for the year ended December 31, 2012. Citi is acting as financial advisor to Cameron and Winston & Strawn and Baker Botts are acting as the Company's legal counsel in connection with the divestiture of the Reciprocating Compression business. Citi is also assisting Cameron in the process of exploring strategic alternatives for its Centrifugal Compression business.
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