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Also Announces Intention to Explore Strategic Alternatives for the Remainder of Compression Systems Business
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.
Cameron is a leading provider of flow equipment products, systems and services to worldwide oil, gas and process industries. For more information, visit www.c-a-m.com.
This document includes forward-looking statements regarding a sale of a business segment, its timing, use of proceeds, and possible effects of such a sale on the Company's operations, prospects and results, as well as statements regarding exploration of strategic alternatives for another business segment. These statements are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual events and/or their results may differ materially from those described in the forward-looking statements. Such statements are based on current expectations and are subject to risks and uncertainties that may result from a variety of factors, some not under the control of the Company, which can affect the actual occurrence of the matters described and/or their outcome to include their impact on results of operations, liquidity or financial condition. A discussion of certain factors that may affect actual events is contained in Cameron's filings from time to time with the Securities and Exchange Commission.
Because the information herein is based solely on data currently available and parties' present intent, it is subject to change, in some cases to changes over which the Company may not have control or influence, and should therefore not be viewed as assurance the matters described will occur or will occur as described. The Company is not obligated to make public indication of any change unless required under applicable disclosure rules and regulations. With respect to the exploration of strategic alternatives, there can be no assurance as to whether any particular alternative will be undertaken or, if so, upon what terms and conditions. The Company does not intend to disclose developments with respect to its evaluation of alternatives until such time as its Board of Directors has approved a transaction or otherwise deems disclosure appropriate.
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