Antitrust Divestments Let Flowserve-IDP Deal Proceed
The agreement in principle with the US Dept. of Justice remains contingent upon negotiation of mutually acceptable settlement documentation. Flowserve expects to submit the package shortly. It expects to close the IDP acquisition in August after lining up financing.
Flowserve agreed to acquire Ingersoll-Dresser Pumps for $775 million in cash in February. The acquisition, which doubles the Flowserve's size and improves it profitability, will create the world's second largest pump company. The companies had planned to close the deal in April until the Dept. of Justice raised antitrust issues.
The agreement with Justice addresses sales of highly engineered pumps for installation in US oil refineries and power generation facilities. According to Flowserve, it will affect less than 3% of the combined 1999 revenues of Flowserve and IDP, including several product lines where Flowserve plans to retain certain nonexclusive rights.
The IDP acquisition is Flowserve's second major purchase since acquisition-minded president/CEO C. Scott Greer took the helm of the company in July 1999. Earlier this year, the company purchased Innovative Valve Technologies, Inc. (Invatec, Houston), for $100 million. Invatec is a distributor that provides maintenance, repair, and replacement services for industrial valves, piping systems, and process system components.
Greer also launched a $27 million restructuring campaign to boost company operating profits by $20 annually.
The company is a major supplier to the chemical and process industries. Its 1998 sales were 34% petroleum processing, 31% chemical processing, and 15% power. The United States is its largest market (58% of its sales), followed by Europe/Mideast (25%) and Asia/Pacific (7%).
Flowserve produces engineered process pumps; precision mechanical seals; automated and manual quarter-turn valves, control valves, and valve actuators; and provides flow management services. Operating in 28 countries with 7000 employees, it posted 1999 sales of $1.1 billion.
By Alan S. Brown