Growth in natural gas infrastructure services appeared to be the impetus behind General Electric Co.'s (GE) announcement Wednesday that it would pay $3 billion to buy Dresser Inc.

Dresser, based in Addison, TX, is majority-owned by funds managed by Riverstone Holdings and First Reserve Corp. The company manufactures and services onshore and offshore natural gas servicing equipment, engines and compressors, as well as fueling systems and flow-control valves.

Dresser, once owned by Halliburton, and GE "don't compete with each other in our primary space, even though we make similar equipment," said Dresser CEO John Ryan. "This allows them to expand their product offering pretty dramatically."

GE and its business units already have a big footprint in the energy sector. Among other things GE builds natural gas-fired turbines for power generation, pipeline equipment and liquefied natural gas terminals. GE also provides water treatment and recycling for oil and gas drilling operations.

Earlier this month GE unveiled a mobile version of its water treatment technology designed to reach remote gas drilling locations (see Daily GPI, Oct. 1). The 50-gallon/minute mobile evaporator system, to be introduced in early 2011, is designed to help gas producers recycle wastewater at the well site from hydraulic fracturing processes.

The purchase was GE's second energy-related purchase in less than two weeks. Early this month the company acquired the assets of Calnetix Power Solutions, a California-based company that specializes in generating power from waste heat. Terms of that transaction were not disclosed.

"GE is making strategic bets that play to our strengths, address market needs and return value to shareowners," said spokeswoman Anne Eisele. GE plans to invest in new product development at Dresser and expand in new locations.

"We think there will be far more opportunities being part of a large operation like General Electric," said Ryan. "I think our people really look forward to the opportunities from a career advancement stage." Ryan, who has worked for Dresser for 24 years, did not know if he would stay with the merged company.

John Krenicki, who serves as CEO of GE's Energy Infrastructure Division, told Reuters that the company sees opportunity for more acquisitions in the energy, health care and financial services sector. The company could spend up to $30 billion on mergers in the next few years, he said.

Canaccord Genuity analysts said the transaction puts GE "fully back on the acquisition hunt..." Dresser, they noted, generated $318 million in earnings in 2009 on $2 billion in revenue.

"This jumps to the top of the list as GE's largest [deal] of the year and marks its latest move to expand its energy business," said Canaccord's team.

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