Oil drilling equipment maker
Cameron International Corporation
) announced that it has signed a deal with industrial goods
manufacturer, Ingersoll-Rand Plc (
) for the sale of its Centrifugal Compression business. The
transaction is valued at about $850 million in cash.
Cameron anticipates after-tax proceeds of about $600 million from
the sale which it intends to use to buy back stocks. The
transaction is expected to close by 2014.
Cameron added that the sale decision was made keeping in mind the
company's long-term strategy to focus on its core markets. The
company also stated that it wanted to find a buyer more closely
associated with the centrifugal compression business operations.
Revenues from the Centrifugal Compression unit, which provides
centrifugal compressors services for various industries across the
globe, were $396 million last year. Cameron mentioned that since
the start of the third quarter, this division would be reported as
Earlier in the year, Cameron sold its reciprocating compression
business to the diversified conglomerate General Electric Co. (
), also as a strategic move to streamline operations.
Houston, TX-based Cameron is a leading manufacturer of pressure
control equipment used in onshore, offshore, and subsea
applications for oil and gas drilling, production, and
Cameron has consistently performed well in the past few quarters in
terms of earnings results. In the trailing four quarters, the
company has a positive earnings surprise of 4.89%, boosted by the
second-quarter beat of 13.64%.
Currently, Cameron sports a Zacks Rank #1 (Strong Buy), implying
that it is expected to significantly outperform the broader U.S.
market in the next one to three months. Meanwhile, one can also
consider other players from the same industry like Weatherford
International plc (
), which also sports a Zacks Rank #1.
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