Siemens is on the prowl for an acquisition in the oil and gas equipment and services industry, according to a recent report by Reuters. It seems that CEO Joe Kaeser wants to take advantage of the booming U.S. natural gas industry, sparked by the hydraulic fracturing revolution. Analysts have named Chart Industries (NASDAQ:GTLS) as one of the possible takeover targets, Reuters reported.

Chart Industries has had some challenges lately though, and may not be the most attractive choice. Revenue for the quarter ended March 31 was down 3% from the same quarter last year, and combined with lower margins, this sliced net income by 23% from the March, 2013 quarter. According to the company's earnings release, these poor results were primarily due to its BioMedical segment, which had a sales decline of 21% compared with the prior year's quarter.

A multi-faceted producer
But the BioMedical business is only one of the company's three main segments. Chart Industries manufactures products and systems for cryogenic and gas processing. Revenues from its Energy and Chemicals segment increased by 7% while the Distribution and Storage segment saw a slight 1% improvement in sales. In fact, the BioMedical segment accounted for only 23% of sales in 2013. The Energy and Chemicals segment accounted for 27% while the Distribution and Storage business provided 50% of the revenue.

The BioMed segment has its own end-user base in the health care industry, but both of the other two segments serve users in manufacturing, food, and energy. A look at how each of these industries contributes to the company's overall sales makes the situation clearer.

Courtesy Chart Industries

As the above slide shows, most of the company's end users are in the energy industry, with processing of natural gas and liquefied natural gas (LNG) making up the lion's share. A suitor like Siemens would find two of Chart Industries' product lines especially interesting: its natural gas liquids (NGL) recovery products and its LNG processing products.

Two key product lines for growth
As environmental concerns grow over the practice of gas flaring on oilfields, more companies are capturing the gas instead and sending it along to processing plants. Chart Industries' NGL recovery products extract the valuable ethane, butane, propane, and other liquids for use as chemical plant feedstock or as fuels.

There are similar growth prospects for the company's LNG processing systems. LNG demand is growing as countries in geopolitically unstable regions seek alternatives to gas deliveries via pipeline, as evidenced in the recent Ukraine crisis. In Asia, lack of pipeline infrastructure, China's increasing desire to move away from smog-producing coal, and Japan's need for an alternative to its nuclear plants are all factors in the growth of LNG demand.

Courtesy Chart Industries

Chart Industries can produce entire systems or just individual components like cold boxes and heat exchangers for liquefaction plants. Due to the LNG boom, companies are planning or already building such facilities in Australia, the U.S. Gulf Coast, Alaska, and the west coast of Canada. The company can serve a variety of project sizes, from small start-up plants to the largest projects. Chart is an approved equipment supplier to Bechtel, a major builder of such plants around the world. The direct water access of the company's fabrication facility in New Iberia, Louisiana is essential to delivering these large components to end users across the globe.

Should Fools rush in?
It's clear why Siemens would want some of these assets, and Chart Industries' balance sheet and cash flow are fairly strong. However, the drop in BioMedical sales and the corresponding hit to earnings make it a less attractive target. That could change if the health industry market improves for the company, so watch for better BioMedical sales in the coming quarterly results.

Even if that doesn't happen of course, a buyer could always spin off the non-energy related businesses. Or there may not be a buyer at all. This is all little more than speculation at this point.

Aggressive investors may want to speculate now on better earnings, more growth in the energy product lines, or even a possible takeover. For most however, it's more prudent to sit it out. Wait to see if the company can turn itself around before jumping in.