Flowserve Corp. has acquired of Invensys plc's Flow Control Division (IFC). The $535 million acquisition creates the world's second largest valve company serving a wide range of industries, including petroleum, chemical, power, water and general industry.
"We couldn't be more enthusiastic about our acquisition of IFC," said C. Scott Greer, Flowserve's chairman, president and chief executive officer. "This is truly a transforming acquisition catapulting Flowserve to a market leader in the global valve industry. This is also a complementary acquisition and significantly broadens Flowserve's product offerings. The addition of IFC enables our combined customer base to take advantage of the benefits of a 'one-stop shopping' supplier."
"The integration of IFC into Flowserve will begin immediately," Greer said. "We have already identified opportunities for synergies and cost savings that should positively impact the combined businesses and should have increasing benefits in future periods. Moreover, we expect this acquisition to be neutral or mildly accretive to 2002 earnings, excluding one-time charges, even without these synergies."
To help finance the acquisition of IFC, Flowserve issued 9.2 million shares of common stock, resulting in net proceeds of about $277 million. The company financed the remainder of the purchase price through its senior credit facilities.
"We are pleased by the positive investor response to our common stock offering, which we view as a vote of confidence in Flowserve's business model," Greer said. "Also, we appreciate the support of our lenders, who refinanced a significant portion of our existing debt and lent us additional funds, both at a lower effective rate, to finance this growth. This financing package improves our pro forma net debt-to-capital ratio to 64.4 percent at the end of the first quarter of 2002, compared with 71.3 percent at year end 2001 and 78.1 percent at year end 2000. We are extremely excited about the significant opportunities this acquisition creates for Flowserve, our customers, and our shareholders," Greer said.
Flowserve Corp. is one of the world's leading providers of industrial flow management services. Operating in 30 countries, the company produces engineered and industrial pumps for the process industries, precision mechanical seals, automated and manual quarter-turn valves, control valves and valve actuators, and provides a range of related flow management services.