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Neles Acquiring Valve and Pump Businesses of Flowrox

Neles signed an asset purchase agreement to acquire the valve and pump businesses of the Finland-based technology company Flowrox.
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Neles has signed an asset purchase agreement to acquire the valve and pump businesses of the Finland-based technology company Flowrox. The acquisition will complement Neles' offering and exposure to the mining and metals industry.

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. 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.

“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 knowhow,” says Olli Isotalo, president and CEO at Neles. “Going forward, we plan to continue developing the transferring businesses as a platform for growth in a strategic focus industry.”

“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,” says Jukka Koskela, president and CEO of Flowrox.

In 2020, Flowrox’s valve and pump businesses had sales of about EUR 30 million. The businesses’ sales in fiscal year 2021 are expected to remain at the level of 2020. The profitability of the carved-out businesses is comparable to Neles’ in terms of adjusted EBITA margin. The acquired net assets consist of intangible and tangible assets as well as inventories related to the acquired businesses. The transaction also includes the Flowrox brand. The acquired businesses employ approximately 110 people and have manufacturing in Finland, Australia, South Africa, and the United States, as well as well-established sales channels in over 80 countries.

The purchase price of the valve and pumps businesses is EUR 40.9 million, payable in cash at closing, with an additional orders received-based earn-out consideration of up to EUR 3 million for a one-year period after closing, also payable in cash. The transaction is expected to be positive for Neles’ earnings per share already in 2022. The closing of the acquisition is estimated to take place in November 2021.

About the Flowrox valve and pump businesses

The Flowrox valves and pumps businesses are part of the privately owned Flowrox Group. The businesses design and manufacture valve and pump solutions that are used in variety of process industries, especially in mining, minerals processing, metallurgy, construction, energy, environment, and chemical industries. Flowrox is a global leader in pinch valves and has a strong offering in knife-gate valves and peristatic pumps, amongst other products. The Flowrox Group will continue to retain full ownership of its other businesses, including its filtration, environmental technologies, and industrial automation solutions.

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