Siemens (OTCMKTS:SIEGY), the German technology company, has agreed today to buy Dresser-Rand (NYSE:DRC), the maker of oilfield equipment based in the United States.

Siemens will pay $7.6 billion in cash for the American oil equipment manufacturer. This move is to help Siemens close the gap and catch up with its competitor General Electric (NYSE:GE) in the booming shale oil market in the United States.

The purchase is one of the largest in the history of the German industrial firm, and will reinforce Siemen’s position in the United States, which is currently its weakest region of operation. Siemen also hopes to focus its efforts more tightly on its industrial clients.

Siemens put into action a complete overhaul of its corporate operations, naming the effort “Vision 2020.” The company’s goal was to catch up to more profitable rivals in the industry, like ABB (NYSE:ABB), an energy company based in Switzerland, as well as General Electric here in the United States. Siemens also hopes to reduce its vulnerability to cyclical consumer business operations, where it has seen little success.

The company said today that it will also sell its stake in BSH, a joint venture in household appliances, to Robert Bosch, the partner in the joint venture deal. This transaction will bring in about 3 million euros (or $3.9 billion) for Siemens, which will be used to fund the acquisition of Dresser-Rand.

According to Jasko Terzic, a analyst at DZ Bank, the company’s offer for Dresser-Rand is high, but it can now be justified due to being a good fit into the Siemens goal of boosting its oil and gas operations in the United States.

Siemnes’ energy operations in the United States brought in about 37 billion euros in revenue during the last fiscal year. This pales in comparison to the $20 billion that General Electric’s United States businesses received in just oil and gas alone.

Terzic stated that the acquisition valued Dresser-Rand’s enterprise value, which includes equity plus debt, at around 16 times its earnings before interest, tax, depreciation, and amortization. Other peers in the space are usually valued at just 8.5 times its EBITDA.

Siemens has been vying after Dresser-Rand for a long time, but held out from making a bid due to its high valuation.

The German energy company seems to have been taken action due to a rival bid from Sulzer Ag (SUN), a pump maker based in Switzerland, which had offered an all stock merger with the American equipment maker.

Sulzer stated today that it had stopped all discussions with Dresser-Rand. However, some analysts are saying that there was still a possibility of a rival offer emerging to challenge Siemens’ bid.

Perfect Combination

According to Siemens, its bid that valued Dresser-Rand’s shares at $83 each was collectively approved by the board of directors at Dresser-Rand. The company’s closing price on Friday came out to be $79.91, which had increased about 27 percent over the past three months due to the speculation of a takeover.

According to Joe Kaeser, the chief executive officer of Siemens, Dresser-Rand is the perfect fit for the portfolio of Siemens, especially since it is the premium brand in the markets for global energy infrastructure.

The booming shale gas market in the United States has pushed many energy companies to send their investments there, generating demand for the turbines and compressors that companies like Dresser-Rand manufacture.

The annual capital expenditure on gas, oil, and coal has increased by more than two fold in real terms since the fourteen years ago in 2000. In 2013 last year, that figure beat out $950 billion.

The deal with Dresser-Rand will be the largest acquisition that Siemen has made in recent years. In 2007, the German energy firm purchased Dade Behring for $7 billion under Peter Loescher, the former chief executive officer and now current chairman of Sulzer. At the time, Siemens was criticized for overpaying for the deal.

Earlier this year, Siemens filled in another hole in its energy equipment portfolio when it paid 950 million euros for smaller gas and turbine assets from Rolls Royce (LON:RR). At the time of that purchase, Kaeser stated that the next item on the company’s agenda was to expand into the United States.

Accordign to analysts from JP Morgan, Siemens spaid 12.5 times EBIT for the assets from Rolls Royce. In the case of Dresser-Rand, the company is offering 20 times EBIT, emphasizing the overpriced valuation for the deal.

Siemens is aiming for annual synergies that total over 150 million euros by 2019 from the acquisition of Dresser-Rand. This transaction will support its business in downstream and industrial applications, turbo compressors, and larger steam turbines.

The company states that the deal is expected to close by the summer of 2015. It plans to complete the selling of its stake in BSH by the first 6 months of 2015, which will terminate 45 year partnership in household appliances.

Siemens has much history in the consumer markets. Ten years ago, it got rid of its mobile phone operations. Five years ago, it got out of its joint venture Fujitsu Siemens Computers. Last year, Siemens spun off Osram, a manufacturer of light bulbs.

BSH is said to pay out a total of 250 million euros to both of its owners, Siemens and Bosch, before the transaction is done.

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