Ingersoll-Rand purchases Cameron Compression Division

Jose Castro – Fourth Estate Cooperative Contributor

Charlotte, NC, United States (4E) – In an announcement made last Monday, Ingersoll-Rand PLC announced that it would be acquiring the centrifugal compressor business of Cameron International Corp. This acquisition would expand Ingersoll’s footprint in the industrial compressor market.

In a nutshell, centrifugal compressors have rotating impellers that speed up the flow of air through the compressor. This creates high pressure energy for the user. Amongst the brands that are part of the sale are Turbo-Air as well as MSG brands of centrifugal compressors. These brands are most used in the production of chemicals, industrial, power and food generation purposes.

According to Ingersoll Chairman and CEO Mike Lamach, during a conference call, said, “(The acquisition) will substantially expand the breath of our product range, end markets and customer base. When something like this comes around and is such a good fit, it’s something you can’t pass on. We think about it as a once-in-a-multiple-generation opportunity.”

Lamach added, “Cameron is a leading manufacturer and service provider of centrifugal compressors that are used in a range of oil and gas, power generation and industrial applications. Customers of the division include the major oil and gas companies, national oil companies, industrial gases companies, independent power producers, petrochemical and refining companies, midstream natural gas companies and manufacturing companies in diverse industries.”

He further added, “Cameron’s centrifugal compression division offers a complementary product, manufacturing and engineering strengths as well as financial synergies that will make it a natural fit into our core business and will provide meaningful value to our shareholders.”

The acquisition is expected to generate more sales and thus earnings per share soon after the deal is completed. The business is expected to yield between USD0.08 to USD0.10 yearly per share profit in 2015. After 2015, the expected contribution to yearly per share profit would rise to a level between USD0.15 to USD0.20 for the following years after 2015.

The Cameron Centrifugal Compression division builds centrifugal compression machines as well as after market parts and services for the units in industrial application, such as air separation, gas transmission and gas processing. The unit generated about USD400 million in sales for 2013 and has an employee headcount of 850 employees.

Ingersoll-Rand has its corporate headquarters in Ireland but operates mostly out of its Davidson, Charlotte, NC offices. Currently, it has a 1,900 employee headcount making it one of the biggest employers in the Charlotte area. The company manufactures air conditioning systems, after market parts and services and other products.

Cameron is selling the unit, which is based out of Houston, TX, to focus on the manufacture of equipment for the oil industry. The proceeds from the sale would be used to repurchase shares of stock. The said purchase would be funded through a combination of cash on hand as well as debt transactions. It projects that the after tax proceeds of the sale would reach USD600 million. Earlier this year, the company had sold its reciprocating compressor business to General Electric.

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