NEW YORK (TheStreet) -- "Why now? Why wasn't a deal done earlier given that the strategic rationale has always been there?"
That was the question one analyst posed to Siemens (SIEGY) CEO Joe Kaeser as the German conglomerate announced its acquisition of energy equipment maker Dresser Rand (DRC) for $7.6 billion in cash. The acquisition is expected to give Siemens a bigger footprint in the North American oil and gas market and a brand that may carry resonance globally as nations in Asia, Africa, Europe and Latin America look to shale drilling onshore and new offshore drilling techniques to bolster their energy reserves.
General Electric (GE) , Siemens closest competitor globally, has spent the better part of a decade cutting deals for energy equipment manufacturers and generally at far lower prices. While Siemens is paying Dresser Rand an enterprise value of roughly 20-times the company's 2014 earnings before interest, taxes, depreciation and amortization (EBITDA), GE has made similar acquisitions at EV/EBITDA multiples in the high-single-digits or low-teens.
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According to an analysis from JPMorgan analysts on Monday, GE paid an EV/EBITDA of 14 for Wood Group's support division, a multiple of 13 for Wellstream and a multiple of 11 for Lufkin Industries and Cameron International's Reciprocal Compression business. In fact, GE bought Dresser Industries, a spinoff from Dresser-Rand, at a multiple of EV/EBITDA of 9.5 in 2010.
At a lower price, GE might have made a move for Dresser Rand. GE Oil and Gas CEO Lorenzo Simonelli recently said the division continues to look at M&A and expects to grow above industry averages as it integrates recent acquisitions. Bolt-on deals may be a focus for GE Oil & Gas, especially if other parts of the GE empire find deals like Alstom at single digit EV/EBITDA multiples.