Dresser-Rand Group Inc. (NYSE: DRC) signed a definitive agreement to acquire Synchrony, Inc. The transaction is expected to close in January 2012. Synchrony is a technology development company with a portfolio of technologies and products including active magnetic bearings (AMB), high speed motors and generators, and power electronics for clean, efficient, and reliable rotating machinery. A private company founded in 1993, Synchrony is headquartered in Roanoke County, Virginia, where it develops, manufactures, and tests its products in an ISO 9001-certified facility which includes a best-in-class model shop for rapid prototype fabrication and assembly.
According to Christopher Rossi, Dresser-Rand's Vice President of Technology and Business Development, "Several years ago we identified the strategic importance of being able to offer oil-free solutions in high speed rotating equipment applications. The overall value proposition for eliminating auxiliary oil systems centers around three principles: a) reduced footprint and weight in platform and FPSO applications which generates overall CAPEX savings in the construction phase, b) oil-lubricated bearings in subsea applications are neither practical nor reliable, and c) lubrication oil in compressor and steam turbine applications in general needs to be reconditioned and ultimately discarded as it is mixed with process gas or steam, thus making it environmentally unfriendly.
"As we believe that this technology will need to develop on an ongoing basis along with the normal evolution of the other components of our compressor and turbine offerings, we made the decision that we either needed to invest in our own internal R&D effort or acquire excellent design capacity in the marketplace.
"After an extensive technology assessment process we concluded that we have found, what we believe to be, the best technology that exists today in the form of Synchrony. "We believe that the seamless integration of this capability into our product development process will provide us with the ability to continuously improve our overall equipment designs, and is the fastest and least expensive way to build this capability internally.
"Synchrony has already realized this value in the defense, HVAC, wastewater, and renewable energy markets, and will continue to supply its products and technology to leading rotating equipment manufacturers in these respective markets." Under the agreement, Dresser-Rand will acquire Synchrony, Inc. for approximately $50 million net of cash acquired. The agreement includes the potential for additional consideration of up to a maximum of $10 million tied to technical
milestones and to business performance. It should be noted that the operating costs for this acquisition are already included in the Company's guidance for 2012 previously provided.
Dr. Victor Iannello, Synchrony's CEO and President, added, "We are truly excited about becoming part of Dresser-Rand as we believe its global presence and resources will accelerate our growth. I am confident that the combination of
Dresser-Rand and Synchrony provides for new opportunities and unparalleled value for our business partners."