We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Flowserve (FLS) to Acquire MOGAS & Boost Product Portfolio
Read MoreHide Full Article
Flowserve Corporation (FLS - Free Report) recently announced that it has signed a definitive deal to acquire MOGAS Industries for $290 million in cash with a potential $15 million earnout. The company is anticipated to fund the transaction through cash and available debt financing.
Based in Houston, TX, MOGAS is engaged in providing mission-critical severe service valves and related aftermarket services. The company’s products are sold to several end markets, including power, mining and process industries. It has an extensive geographic presence with sales and service offices in Europe, Canada, South America, Australia, China, India and the Middle East.
Acquisition Rationale
The latest buyout decision is in sync with Flowserve’s policy of acquiring businesses to strengthen its business and product portfolio. The company will incorporate MOGAS into its Flow Control Division segment, which manufactures valves, valve automation products, boiler controls and solutions.
The inclusion of MOGAS’ differentiated valve products and its impressive brand and technical expertise in diverse end markets will enable FLS to expand its customer offerings and boost its position in mining, mineral extraction and process industries.
The MOGAS acquisition will augment Flowserve’s existing valve and automation product portfolio and accelerate its 3D growth strategy by significantly boosting its direct mining and mineral extraction exposure. Further, the transaction will likely improve FLS’ aftermarket potential and generate revenue growth synergies.
Management expects the transaction to be completed in the fourth quarter of 2024, subject to the fulfillment of certain customary closing conditions. The buyout is likely to be accretive to FLS’ adjusted earnings per share in the first full year of closing.
Existing Business Scenario
Flowserve is experiencing strong momentum in the Pump Division and Flow Control Division segments. Strength in the aftermarket and original equipment businesses, driven by an increase in demand for products and services in North America, Europe, Middle East and Latin America, is a prime catalyst for the Pump Division segment’s growth (revenues were up 6.1% year over year in the second quarter).
An increase in original equipment sales in the Middle East, North America, Asia Pacific and Europe regions is supporting the Flow Control Division segment’s performance (revenues were up 9.4% year over year in the second quarter).
However, the company has been grappling with escalating costs of sales and expenses. In the second quarter, its cost of sales jumped 4.4% year over year to $790.8 million due to higher raw material costs. In 2023, the metric increased 16.1% year over year.
It also operates in the highly competitive pump and valve markets, comprising well-recognised providers of engineered products and services. The company, which belongs to the Zacks Manufacturing - General Industrial industry, faces stiff competition from several competitors like Crane Co. (CR - Free Report) , Emerson Electric Co. (EMR - Free Report) and ITT Inc. (ITT - Free Report) .
See More Zacks Research for These Tickers
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Flowserve (FLS) to Acquire MOGAS & Boost Product Portfolio
Flowserve Corporation (FLS - Free Report) recently announced that it has signed a definitive deal to acquire MOGAS Industries for $290 million in cash with a potential $15 million earnout. The company is anticipated to fund the transaction through cash and available debt financing.
Based in Houston, TX, MOGAS is engaged in providing mission-critical severe service valves and related aftermarket services. The company’s products are sold to several end markets, including power, mining and process industries. It has an extensive geographic presence with sales and service offices in Europe, Canada, South America, Australia, China, India and the Middle East.
Acquisition Rationale
The latest buyout decision is in sync with Flowserve’s policy of acquiring businesses to strengthen its business and product portfolio. The company will incorporate MOGAS into its Flow Control Division segment, which manufactures valves, valve automation products, boiler controls and solutions.
The inclusion of MOGAS’ differentiated valve products and its impressive brand and technical expertise in diverse end markets will enable FLS to expand its customer offerings and boost its position in mining, mineral extraction and process industries.
The MOGAS acquisition will augment Flowserve’s existing valve and automation product portfolio and accelerate its 3D growth strategy by significantly boosting its direct mining and mineral extraction exposure. Further, the transaction will likely improve FLS’ aftermarket potential and generate revenue growth synergies.
Management expects the transaction to be completed in the fourth quarter of 2024, subject to the fulfillment of certain customary closing conditions. The buyout is likely to be accretive to FLS’ adjusted earnings per share in the first full year of closing.
Existing Business Scenario
Flowserve is experiencing strong momentum in the Pump Division and Flow Control Division segments. Strength in the aftermarket and original equipment businesses, driven by an increase in demand for products and services in North America, Europe, Middle East and Latin America, is a prime catalyst for the Pump Division segment’s growth (revenues were up 6.1% year over year in the second quarter).
An increase in original equipment sales in the Middle East, North America, Asia Pacific and Europe regions is supporting the Flow Control Division segment’s performance (revenues were up 9.4% year over year in the second quarter).
However, the company has been grappling with escalating costs of sales and expenses. In the second quarter, its cost of sales jumped 4.4% year over year to $790.8 million due to higher raw material costs. In 2023, the metric increased 16.1% year over year.
It also operates in the highly competitive pump and valve markets, comprising well-recognised providers of engineered products and services. The company, which belongs to the Zacks Manufacturing - General Industrial industry, faces stiff competition from several competitors like Crane Co. (CR - Free Report) , Emerson Electric Co. (EMR - Free Report) and ITT Inc. (ITT - Free Report) .