Posted by Daniel Gleeson on July 27, 2021
Just over a year after its split from Metso, Neles is looking to gain further exposure to the mining and metallurgical industry with the planned acquisition of Flowrox’s valve and pump business.
Neles has signed an asset purchase agreement to acquire the valves and pumps business of the Finland-based technology company, saying the transaction “will complement Neles’ offering and exposure” to the sector in question.
The purchase price for the valves and pumps business is 40.9 million euros ($ 48.3 million), payable in cash at closing, with an earn-out based on orders received up to € 3 million for a period of one year after closing, also payable in cash.
Neles, itself, is set to be taken over by Finnish engineering company Valmet after an earlier unsuccessful takeover attempt at Alfa Laval.
“The mining and metals market is expected to experience strong growth in the short to medium term over the next decade, driven by growing demand for metals, ore depletion and underlying investments in more efficient processing,” Neles said. “With good long-term fundamentals, service intensity and a different cyclical nature balancing the cycles of industries currently served, mining and metals is an attractive industry for Neles. The acquisition will allow Neles to better take advantage of growth opportunities in mineral processing applications.
Flowrox specializes in flow and process control, filtration, environmental technologies and industrial automation solutions, with its valve and pump solutions including pinch valves, knife gate valves and peristatic pumps, among others.
Olli Isotalo, President and CEO of Neles, said: “Diversifying our clients ‘industries is a key part of Neles’ growth strategy. This acquisition is an excellent choice for Neles because Flowrox is a well-known niche player in flow control in mining and metals and it has the right offer as well as very strong skills and know-how. In the future, we plan to continue to develop the transferred business as a growth platform in a strategic sector.
Jukka Koskela, President and CEO of Flowrox, said: “In recent years, Flowrox operations have grown in many areas through product development and acquisitions. Now is the time to focus. This business transaction will allow us to take the remaining businesses to the next level. We consider Neles to be an excellent partner and a company capable of further developing the valve and pump business. “
In 2020, Flowrox’s valve and pump business achieved sales of around € 30 million, with business sales in fiscal 2021 expected to remain at the same level.
The profitability of the sliced businesses is comparable to that of Neles in terms of adjusted EBITA margin, according to the company. The transaction also includes the Flowrox brand.
The acquired companies employ some 110 people and have manufacturing plants in Finland, Australia, South Africa and the United States, as well as well-established sales channels in more than 80 countries.
The acquisition is expected to close in November 2021.