Neles has signed an asset purchase agreement to acquire the valve and pump businesses of the Finland-based technology company Flowrox. The acquisition will complement Neles’ offering and exposure to the mining and metals industry.
The mining and metals market is expected to have strong short- and mid-term growth for the next decade, driven by the increasing demand for metals, ore depletion, and underlying investments into more efficient processing. With good long-term fundamentals, service intensity, and a different cyclical nature balancing out cycles from currently served industries, mining and metals is an attractive industry for Neles. The acquisition will enable Neles to better leverage growth opportunities in minerals processing applications.
In 2020, Flowrox’s valve and pump businesses had sales of about EUR 30M. The businesses’ sales in the fiscal year 2021 are expected to remain at the level of 2020. The profitability of the carved-out businesses is comparable to Neles’ in terms of adjusted EBITA margin. The acquired net assets consist of intangible and tangible assets as well as inventories related to the acquired businesses. The transaction also includes the Flowrox brand. The acquired businesses employ approximately 110 people and have manufacturing in Finland, Australia, South Africa, and the United States, as well as well-established sales channels in over 80 countries.
The purchase price of the valve and pumps businesses is EUR 40.9M, payable in cash at closing, with additional orders received-based earn-out consideration of up to EUR 3M for one year after closing, also payable in cash. The transaction is expected to be positive for Neles’ earnings per share already in 2022. The closing of the acquisition is estimated to take place in November 2021.