Flowserve Corp. has agreed to buy SIHI from TBG Europe NV for a consideration of $372.5 million. The deal is expected to be completed early in the first quarter of 2015. Baird provided financial advice to TBG on the transaction. Based in the Netherlands, SIHI is a provider of vacuum and fluid pumps.
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
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.