FRANKFURT German engineering group Siemens (SIEGn.DE) has been preparing an offer to acquire U.S.-based compressor and turbine maker Dresser-Rand DRC.N, German magazine Manager Magazin reported on Thursday, citing sources close to Siemens.
Siemens has been expanding in the United States and announced plans to move its energy headquarter there to tap booming demand for oil and gas equipment, as the U.S. power industry switches to natural gas from coal.
Manager Magazin said Siemens Chief Executive Joe Kaeser had mandated Lazard to put together an offer for Dresser-Rand, which had a market value of $4.6 billion at Wednesday's closing price, and would consider a hostile takeover if necessary.
Shares in Dresser-Rand jumped 19 percent to a record high of $71.85 in early trade and traded at $69.85 at 1405 GMT (10.05 a.m. EDT).
Siemens and Lazard declined to comment on the report. Dresser-Rand was not immediately available to comment.
An acquisition of Dresser-Rand would be Siemens's biggest since it bought Dade Behring for $7 billion under Kaeser's predecessor Peter Loescher in 2007, in a deal that was widely criticised as overpriced.
According to Manager Magazin, then-CEO Loescher approached Dresser-Rand about two years ago and was turned down by the U.S. company's Chief Executive Vincent Volpe, but he did not give up hope that a deal could be struck.
The magazine said his successor, Kaeser, put efforts to prepare an offer for Dresser-Rand on hold while the German group entered into a bidding war for peer Alstom's (ALSO.PA) energy assets, which ended last month as France chose General Electric (GE.N) to form an alliance with Alstom.
Analysts said a takeover of Dresser-Rand would now be relatively expensive, considering the company's stock had risen by roughly a third over the past two years and trades about 20 times estimated 12-month forward earnings.
But some said it could still be worth the money for Siemens following the failed Alstom offer.
"Strategically it would be a good fit, it would fill some gaps in the portfolio and improve Siemens's position in North America," Commerzbank analyst Ingo-Martin Schachel said.
Dresser-Rand makes compressors, turbines, rotators and other equipment for oil and natural-gas producers and generates about half of its sales with lucrative aftermarket parts and services.
It posted 2013 sales of $3.03 billion and had a net profit of $168 million.
Siemens filled another gap earlier this year, buying small gas-turbine assets from Rolls-Royce (RR.L) for 950 million euros ($1.3 billion). CEO Kaeser indicated at the time that expansion in the United States was next on the agenda.
"When it comes to gas turbines... the United States is the place to be. And all our routes in the U.S. lead to gas," Kaeser told analysts during a conference call at the time. "That's not only true for the gas turbines, that's also true with everything which is along the process of fracking," he said.
Media reports have repeatedly flagged Siemens's possible interest in Dresser-Rand and named Chart Industries (GTLS.O), Dril-Quip (DRQ.N), Weatherford International (WFT.N) and Tesco Corp (TESO.O) as other possible targets.
Shares in Siemens were down 0.7 percent at 93.62 euros by 1405 GMT, underperforming Germany's blue-chip index, which was down 0.2 percent.
(Additional reporting by Arno Schuetze and Sweta Singh; Editing by Pravin Char and David Clarke)