Invensys, Flowserve complete Flow Control Business sale
London, U.K. and Dallas, Tex. - Invensys plc, and Flowserve Corp. announced May 3 the completed sale of Invensys' Flow Control business to Flowserve. According to Flowserve, the $535 million acquisition creates the world's second largest valve company.
London, U.K. and Dallas, Tex. - Invensys plc , and Flowserve Corp. announced May 3 the completed sale of Invensys' Flow Control business to Flowserve. According to Flowserve, the $535 million acquisition creates the world's second largest valve company.
The sale proceeds will be used by Invensys to reduce its level of indebtedness.
Contracts were exchanged on March 22, 2002 and as previously forecasted, revenues and PBIT for the twelve months ending March 31, 2002, are estimated at around US$520 million and US$65 million respectively. Net assets which are the subject of the transaction are approximately US$330 million. Goodwill written off to reserves by Invensys relating to acquisitions made over the last 25 years for the Flow Control business amounts to approximately $130 million.
Invensys states the sale is consistent with its previously stated objectives to divest non-core assets as part of its overall plan to improve capital strength and increase strategic focus.
"We couldn't be more enthusiastic about our acquisition of IFC," said C. Scott Greer, Flowserve's chairman, president and ceo. "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," he continued. "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," Mr. 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."
Control Engineering Daily News Desk
Gary A. Mintchell, senior editor