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Attractive acquisition of a leading supplier of complementary
vacuum and fluid pumps
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Strong strategic fit with Flowserve’s Industrial Product
Division and chemical industry focus
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Transaction economics fulfill our strict financial discipline
and valuation requirements
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Solid gross margin profile with opportunities for revenue
growth, cost leverage, operating margin improvement, aftermarket
capture and operational initiatives
DALLAS--(BUSINESS WIRE)--Nov. 14, 2014--
Flowserve Corporation (NYSE:FLS), a leading provider of flow control
products and services for the global infrastructure markets, announced
today that it has submitted a binding offer to acquire the equity of
SIHI Group B.V., a global provider of engineered vacuum and fluid pumps
and related services, from TBG Europe NV for consideration of
approximately €298 million ($372.5 million equivalent1).
Closing is subject to standard regulatory approvals and other customary
conditions. The relevant work councils of SIHI and other employee
representative bodies will also be consulted prior to formal agreement.
Flowserve anticipates funding the transaction with cash on hand and
debt, with closing expected to occur early in first quarter of 2015.
SIHI Group, based in the Netherlands, and its subsidiaries (“SIHI”)
provides engineered vacuum and fluid pumps, with associated aftermarket
parts and services, primarily serving the chemical market, as well as
the pharmaceutical, food & beverage and other process industries. SIHI
has operations across Europe, the Americas and Asia. SIHI anticipates
FY2014 sales of approximately €280 million ($350 million1)
with EBITDA of approximately €30 million ($37.5 million1) and
gross margins approaching 30 percent. Including anticipated synergies,
expected to be achieved in full on an annual basis beginning in 2017,
the transaction economics indicate a multiple of less than 7x EBITDA.
With anticipated growth and synergies, Flowserve expects to double
SIHI’s EBITDA by 2017 as well as support IPD’s target margins of 14-15%,
following the impact of non-cash purchase price accounting, as well as
transaction, integration and optimization expenses.
“We are excited about the acquisition of SIHI, which is consistent with
Flowserve’s ongoing growth strategy to add complementary assets to our
portfolio and then accelerate their growth and leverage our operating
platform,” said Mark Blinn, president and chief executive officer of
Flowserve. “The expected combination of SIHI’s solid installed base,
with its leading position as a supplier of vacuum and fluid pumps,
ability to enhance our chemical ISO pump strategy, engineering and
manufacturing experience, strong gross margin profile, opportunity to
leverage increased scale and both revenue and financial synergy
potential make SIHI a natural fit for Flowserve that exceeds our
disciplined financial requirements which drives solid long-term value
for our shareholders.”
Investor Conference Call
Flowserve will host its conference call with the financial community on
Friday, November 14 at 9:00 AM Eastern to discuss the proposed
acquisition and answer questions. Mark Blinn, president and chief
executive officer of Flowserve, as well as other members of the
management team will participate. The call can be accessed by
shareholders and other interested parties by dialing 1-800-471-6718 with
the passcode 38502012. The call, and the accompanying slide presentation
containing additional information on this transaction, can also be
accessed at www.flowserve.com
under the Investor Relations section.
(1) Utilizing a 1.25 foreign currency exchange rate
About Flowserve
Flowserve Corp. is one of the world’s leading providers of fluid motion
and control products and services. Operating in more than 50 countries,
the company produces engineered and industrial pumps, seals and valves
as well as a range of related flow management services. More information
about Flowserve can be obtained by visiting the company’s Web site at www.flowserve.com.
SAFE HARBOR STATEMENT: This news release includes forward-looking
statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934, which are
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, as amended. Words or phrases such as,
“may,” “should,” “expects,” “could,” “intends,” “plans,” “anticipates,”
“estimates,” “believes,” “forecasts,” “predicts” or other similar
expressions are intended to identify forward-looking statements, which
include, without limitation, earnings forecasts, statements relating to
our business strategy and statements of expectations, beliefs, future
plans and strategies and anticipated developments concerning our
industry, business, operations and financial performance and condition.
The forward-looking statements included in this news release are based
on our current expectations, projections, estimates and assumptions.
These statements are only predictions, not guarantees. Such
forward-looking statements are subject to numerous risks and
uncertainties that are difficult to predict. These risks and
uncertainties may cause actual results to differ materially from what is
forecast in such forward-looking statements, and include, without
limitation, the following: a portion of our bookings may not lead to
completed sales, and our ability to convert bookings into revenues at
acceptable profit margins; changes in the global financial markets and
the availability of capital and the potential for unexpected
cancellations or delays of customer orders in our reported backlog; our
dependence on our customers’ ability to make required capital investment
and maintenance expenditures; risks associated with cost overruns on
fixed-fee projects and in taking customer orders for large complex
custom engineered products; the substantial dependence of our sales on
the success of the oil and gas, chemical, power generation and water
management industries; the adverse impact of volatile raw materials
prices on our products and operating margins; economic, political and
other risks associated with our international operations, including
military actions or trade embargoes that could affect customer markets,
particularly Middle Eastern markets and global oil and gas producers,
and non-compliance with U.S. export/re-export control, foreign corrupt
practice laws, economic sanctions and import laws and regulations;
increased aging and slower collection of receivables, particularly in
Latin America and other emerging markets; our exposure to fluctuations
in foreign currency exchange rates, including in hyperinflationary
countries such as Venezuela; our furnishing of products and services to
nuclear power plant facilities and other critical processes; potential
adverse consequences resulting from litigation to which we are a party,
such as litigation involving asbestos-containing material claims; a
foreign government investigation regarding our participation in the
United Nations Oil-for-Food Program; expectations regarding acquisitions
and the integration of acquired businesses; our relative geographical
profitability and its impact on our utilization of deferred tax assets,
including foreign tax credits; the potential adverse impact of an
impairment in the carrying value of goodwill or other intangible assets;
our dependence upon third-party suppliers whose failure to perform
timely could adversely affect our business operations; the highly
competitive nature of the markets in which we operate; environmental
compliance costs and liabilities; potential work stoppages and other
labor matters; our inability to protect our intellectual property in the
U.S., as well as in foreign countries; obligations under our defined
benefit pension plans; and other factors described from time to time in
our filings with the Securities and Exchange Commission.
All forward-looking statements included in this news release are based
on information available to us on the date hereof, and we assume no
obligation to update any forward-looking statement.
Source: Flowserve Corporation
Flowserve
Investor Contacts:
Jay Roueche, 972-443-6560
Vice
President, IR & Treasurer
or
Mike Mullin, 972-443-6636
Director,
Investor Relations
or
Media Contact:
Lars Rosene,
972-443-6644
Vice President, Global Communications and Public
Affairs