Just over a year after being spun off from Metso, Neles is looking to gain further exposure to the mining and metals industry with the planned acquisition of Flowrox’s valve and pump businesses.
Neles has signed an asset purchase agreement to acquire the valve and pump businesses of the Finland-based technology company, saying the transaction will “complement Neles’ offering and exposure” to the industry in question.
The purchase price of the valve and pumps businesses is €40.9 million ($48.3 million), payable in cash at closing, with an additional orders received-based earn-out consideration of up to €3 million for a one-year period after closing, also payable in cash.
Neles, itself, is due to be taken over by Finnish engineering firm Valmet after a previous failed takeover attempt by Alfa Laval.
“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,” Neles said. “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.”
Flowrox specialises 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, Neles, said: “Diversification of our customer industries is a key component of Neles’ growth strategy. This acquisition is an excellent fit for Neles as Flowrox is a well-known niche player in flow control within mining and metals and it has the right offering and very strong competence and know-how. Going forward, we plan to continue developing the transferring businesses as a platform for growth in a strategic focus industry.”
Jukka Koskela, President and CEO, Flowrox, said: “In recent years, Flowrox’s operations have expanded in many areas through product development and acquisitions. Now it is time to focus. This business transaction will enable us to advance the remaining businesses to the next level. We see Neles as a great partner and a company who can further develop valve and pump businesses.”
In 2020, Flowrox’s valve and pump businesses had sales of about €30 million, with the businesses’ sales in the 2021 fiscal year 2021 expected to remain at the same level.
The profitability of the carved-out businesses is comparable to Neles’ in terms of adjusted EBITA margin, according to the company. The transaction also includes the Flowrox brand.
The acquired businesses employ some 110 people and have manufacturing in Finland, Australia, South Africa, and the US, as well as well-established sales channels in over 80 countries.
The closing of the acquisition is estimated to take place in November 2021.