Flowserve Corp. has sold assets of its General Services Group (GSG) to Furmanite Worldwide, Inc., a unit of Dallas-based Xanser Corp., for approximately $16 million in gross cash proceeds, while retaining approximately $12 million of net accounts receivable. The final purchase price is subject to certain post-close adjustments. Net cash proceeds will be used to repay debt.
"An analysis of our business portfolio indicated that GSG's focus on non-Flowserve products did not align with Flowserve's long-term strategy," said Lewis M. Kling, Flowserve president and CEO. "Our strategic priorities are focused on end-user strategies that allow the company to capture the full life cycle of Flowserve products and enhance our support for them. I believe that GSG can now better realize its potential through its sale to Furmanite, while permitting Flowserve to increase its focus on its growing core businesses."
CFO Mark A. Blinn added, "This divestiture comprises 36 sites and approximately eight ERP systems worldwide and is a step toward simplifying our systems infrastructure."
The GSG businesses that were sold include pressurized on-line repair services at customer sites and general valve repair services at local service centers. The company retained its valve service centers that focus on servicing and repairing Flowserve-manufactured valves, plus its global valve manufacturing operations.Flowserve announced earlier in 2005 that it was seeking a buyer for GSG, which was part of Flowserve's Flow Control Division. The GSG business was subsequently reclassified as a discontinued operation in the first quarter of 2005. The company expects GSG to have 2004 revenues greater than $100 million and to incur an operating loss.
Flowserve estimates it will recognize in its 2005 financial results a loss related to impairment charges and the ultimate sale totaling approximately $34 million, subject to any post-closing adjustments, plus transaction expenses and related employee retention costs.