Siemens (OTCPK:SIEGY) has secured unconditional EU regulatory approval for its proposed $7.6B bid for Dresser-Rand (NYSE:DRC).
"After a detailed assessment of the markets involved, the Commission is satisfied that European consumers will not be negatively affected by the merger," European Competition Commissioner Margrethe Vestager said in a statement.
Siemens is looking to the deal to expand its presence in the United States and the shale exploration boom.
New additions to Goldman's hedge fund hotels - 50 stocks which most frequently appear among the largest ten holdings of hedge funds: AerCap (NYSE:AER), Assured Guaranty (NYSE:AGO), Baker Hughes (NYSE:BHI), Citizens Financial (NYSE:CFG), Colony Capital (NYSE:CLNY), Dresser-Rand (NYSE:DRC), Family Dollar (NYSE:FDO), Hospira (NYSE:HSP), Netflix (NASDAQ:NFLX), NXP Semi (NASDAQ:NXPI), Pharmacyclics (NASDAQ:PCYC), Visa (NYSE:V), and Walgreens (NASDAQ:WBA).
Since 2001, the basket has outperformed the S&P 500 in 66% of quarters by an average of 73 basis points. YTD, however, it has underperformed by nine bps. Goldman notes the current basket overweights Consumer Discretionary (22%) and underweights Consumer Staples (2%).
Looking at the full list, Actavis (NYSE:ACT) leads the way, with 77 funds naming the stock as a top 10 holding. Next up is Apple (NASDAQ:AAPL) with 69, then Facebook (NASDAQ:FB) at 42. For the entire list of 50, the average is 26 funds making a stock a top 10 holding.
The rest in order: Valeant (NYSE:VRX), Microsoft (NASDAQ:MSFT), DirecTV (NASDAQ:DTV), Citigroup (NYSE:C), Time Warner (NYSE:TWC), Delta (NYSE:DAL), Cheneire (NYSEMKT:LNG), Yahoo (NASDAQ:YHOO), Liberty Global (NASDAQ:LBTYK), AIG, SunEdison (NYSE:SUNE), Air Products (NYSE:APD), Amazon (NASDAQ:AMZN), GM, BofA (NYSE:BAC), JPMorgan (NYSE:JPM), Macquarie Infrastructure (NYSE:MIC), American Airlines (NASDAQ:AAL), Charter Communications (NASDAQ:CHTR), Google (GOOG, GOOGL), Ally Financial (NYSE:ALLY), NorthStar Realty (NYSE:NRF), Priceline (NASDAQ:PCLN), eBay (NASDAQ:EBAY), MasterCard (NYSE:MA), Alibaba (NYSE:BABA), Micron (NASDAQ:MU), Williams (NYSE:WMB), Gilead (NASDAQ:GILD), Berkshire Hathaway (BRK.A, BRK.B), Dolar General (NYSE:DG), NorthStar Asset (NYSE:NSAM), Brookdale Senior (NYSE:BKD), DISH Network (NASDAQ:DISH).
The European Commission warned in February that the deal might reduce competition and drive up prices, but apparently it has not sent a statement of objections to Siemens, which reportedly would mean "unconditional clearance."
Siemens' acquisition of the supplier of equipment such as compressors and gas turbines used to exploit shale resources would pose strong competition in the U.S. market for the likes of GE.
Siemens (OTCPK:SIEGY) will confirm its full-year forecasts when it reports quarterly results in May, a senior company source told Reuters.
"Business is running exceptionally stably, according to plan," the source said.
The person also added that Siemens saw no prospect of having to write down U.S. oilfield equipment maker Dresser-Rand (NYSE:DRC) (which it agreed to buy for $7.6B) despite the steep drop in oil prices since the deal was struck last year.
Siemens (OTCPK:SIEGY -5.4%) slumps after CEO Joe Kaeser tells investors that falling oil prices and operational difficulties are hurting profit and sales at the engineering company.
Weakening demand for items such as gas turbines and oilfield equipment will lead to a “moderate organic revenue decline” in the company's FQ2, Kaeser says, adding that operational difficulties at the wind power and process industries units likely will weigh on the profitability of Siemens’ industrial business that quarter.
Separately, a report from the German magazine Manager suggests the Siemens merger with Dresser-Rand (DRC -1.5%) could be in trouble.
Dresser-Rand (NYSE:DRC) says it will cut 8% of its global workforce, or ~650 jobs, because of the weak oil price environment, "taking appropriate measures to continue its emphasis on operating earnings growth, even in what is expected to be a relatively stable year in sales in 2015."
DRC says the cutbacks are in response to ongoing market conditions and not in anticipation of its merger with Siemens (OTCPK:SIEGY).
In its Q4 earnings report, DRC says results were hurt by several events - including the cost of the merger transaction, the price of oil and the movement in several non-U.S. dollar based trade currencies - that it believes masks an otherwise a strong operating performance.
The European Commission says it has opened an investigation to assess whether Siemens' (OTCPK:SIEGY +1.5%) proposed $7.6B acquisition of Dresser-Rand (DRC +0.1%) is in line with EU antitrust regulations.
Siemens is seeking to reinforce its presence in the U.S. shale oil and gas industry through the deal; both companies supply turbo compressors as well as the engines which drive the compressors.
The EC now has 90 working days, until June 19, to complete its probe.
Shareholders are likely to grill Siemens' (OTCPK:SIEGY) Chief Executive Joe Kaeser over the price he agreed to pay for U.S. oil equipment maker Dresser-Rand (NYSE:DRC) at the company's annual general meeting on Tuesday, WSJ reports.
Since Siemens announced the $7.6B deal, valuing Dresser at roughly 58x the past year’s per-share earnings, many analysts have argued that Kaeser overpaid.
A sharp decline in energy prices is also making investors worry.
Despite a decline in oil prices, Siemens (OTCPK:SIEGY) Chief Executive Joe Kaeser announces he would "not even think about walking away" from September's $7.6B Dresser-Rand (NYSE:DRC) deal.
Siemens also see higher synergies from the Dresser-Rand purchase, and is now targeting 30% more savings from the acquisition. The group previously said it expected more than €150M in annual synergies by 2019.