Flowserve to acquire Velan in an all cash transaction for $245M

Flowserve and Velan announced that they have entered into a definitive agreement under which Flowserve will acquire Velan in an all cash transaction valued at approximately $245M, including the purchase of all of the issued and outstanding Velan equity for approximately $209M and the assumption of approximately $36.3M in outstanding gross debt as of November 30, 2022. Flowserve will also assume Velan’s $31.4M of cash and cash equivalents, also as of November 30, 2022. The transaction is expected to close by the end of the second quarter of 2023. Founded in Montreal in 1950, Velan is a leading manufacturer of industrial valves with a strong presence in the nuclear, cryogenic and defense markets. Velan is a family-controlled business, with a team of 1,650 people and manufacturing facilities in nine countries. Through its fiscal third quarter ended November 30, 2022, Velan reported trailing twelve-month revenues of approximately $380M with reported EBITDA of approximately $21M. Upon completion of the transaction, Velan will become part of Flowserve’s Flow Control Division segment. Velan adds significant value within Flowserve’s existing valves portfolio and further builds upon Flowserve’s existing assets through the addition of Velan’s premier brands, strong heritage and technical expertise in attractive and diverse end markets. The additional scale, footprint consolidation and procurement opportunities provided by the combination is expected to result in substantial synergies. Further, the transaction is expected to increase Flowserve’s aftermarket potential, based on the large installed base of Velan products and the expansive network of Flowserve’s Quick Response Centers. In addition to revenue synergies created through a global aftermarket footprint, Flowserve expects to realize approximately $20M of run-rate cost synergies within two years after close. The transaction is expected to be accretive to Flowserve’s adjusted EPS in the first full year following close. Including anticipated synergies, the economics imply an EBITDA multiple of less than 7x.