Cameron (NYSE: CAM) has agreed to sell its Reciprocating Compression business to GE Oil & Gas (NYSE:GE) for $550 million. Cameron intends to use the net cash realized from the divestiture of the Reciprocating Compression division to partially fund its existing share repurchase program. The sale is expected to close during the third quarter of 2014.
The division provides reciprocating compression equipment and aftermarket parts and services for oil and gas production, gas processing, gas distribution, and independent power industries. It generated sales of $355 million in 2012, and operates from 20 global locations.
High-speed reciprocating compressors are used in several applications from gas gathering, and gas lift and injection, as well as transmission and storage. The development of shale oil and gas fields, particularly in North America, has increased demand for high-speed reciprocating compressors.
The acquisition is expected to close later this year. After closing, Cameron’s Reciprocating Compression division will become part of GE Oil & Gas’ recently formed Downstream Technology Solutions business. The new business is designed to deliver products, services, and packaged solutions for both the traditional downstream and the evolving unconventional oil and gas space.
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.
Cameron also plans to explore strategic alternatives for its Centrifugal Compression business to further enhance the company's focus on its core businesses.