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(Reuters) - Ingersoll-Rand Plc (IR.N), a maker of heating and air conditioning systems, said it would buy Cameron International Corp's CAM.N centrifugal compression unit for $850 million (508.12 million pounds).
The business, which makes oil and gas separation equipment, heaters and water processing systems, reported revenue of $396 million for 2013.
Ingersoll-Rand said it planned to fund the acquisition through a combination of cash on hand and debt. The company had about $930 million cash on hand as of June 30.
The deal is expected to close by the end of the year, the company said.
Ingersoll-Rand said it expected the acquisition to add 8-10 cents per share to its earnings in 2015.
Cameron, which provides flow equipment products, systems and services to the oil and gas industry, said it was selling the unit to focus on its core markets. [
Cameron said it expected after-tax proceeds of about $600 million from the sale, part of which it planned to use for share buybacks.
JP Morgan Securities LLC was Ingersoll-Rand's financial adviser and Simpson Thacher & Bartlett was its legal adviser.
Citi was Cameron's financial adviser and Strawn and Baker Botts its legal counsel.
Ingersoll-Rand's shares closed at $60.55 on the New York Stock Exchange on Friday.
Reporting by Rohit T.K. in Bangalore; Editing by Don Sebastian and Kirti Pandey