DALLAS - Flowserve Corporation (NYSE: NYSE:FLS), a global provider of flow control products and services, announced that it has entered into an agreement to acquire MOGAS Industries, a Houston-based manufacturer of severe service valves. The transaction, valued at $290 million with a potential additional $15 million earnout, is expected to close in the fourth quarter of 2024.
MOGAS, founded in 1973, specializes in producing isolation valves for industries such as mining, power, and process industries. The acquisition is set to double Flowserve's exposure to the direct mining and mineral extraction sectors, enhancing its aftermarket opportunities due to MOGAS's large installed base.
Scott Rowe, President and CEO of Flowserve, stated that the acquisition aligns with the company's growth strategy and will provide technical differentiation in severe service flow control. Matt Mogas, President and CEO of MOGAS, expressed that the merger is a cultural and strategic fit, offering growth opportunities for MOGAS's employees within a larger organization.
The transaction includes an upfront cash consideration of $290 million, with an earnout of up to $15 million linked to MOGAS's adjusted EBITDA performance for the year ending December 31, 2024. The acquisition is projected to be accretive to Flowserve’s adjusted Earnings Per Share in the first full year post-closing.
Flowserve plans to fund the purchase through cash and available debt financing, subject to customary closing conditions and regulatory approvals. MOGAS is expected to contribute revenues of approximately $200 million with high adjusted EBITDA margins.
The combination of both companies is forecasted to yield at least $15 million in cost synergies within two years after closing and increase Flowserve's aftermarket potential. The financial advisors for the transaction are Jefferies for Flowserve and Baird for MOGAS, with Baker McKenzie and Foley & Lardner serving as legal advisors, respectively.
Flowserve, operating in over 50 countries, produces a range of flow management services, including engineered and industrial pumps, seals, and valves. This acquisition is part of the company's ongoing efforts to expand its global reach and service offerings in the infrastructure markets.
This news article is based on a press release statement.
In other recent news, Flowserve Corp . has demonstrated impressive financial growth in the second quarter, with a significant surge in earnings per share by over 40% and a revenue increase of over 7%. The company's bookings grew by 12%, amounting to $1.25 billion, and the backlog expanded to $2.7 billion. TD Cowen, Baird, and Mizuho have all updated their price targets for Flowserve, reflecting their optimism about the company's ongoing transformation and future prospects.
Flowserve is also pursuing strategic mergers and acquisitions, further enhancing its shareholder value. The company's strong financial performance has led to upward revisions in earnings estimates by analysts, with Mizuho raising its estimated earnings per share for 2024 and 2025. These recent developments indicate a positive trajectory for Flowserve Corp.
InvestingPro Insights
As Flowserve Corporation (NYSE: FLS) moves forward with its strategic acquisition of MOGAS Industries, investors and stakeholders are keenly observing the company's financial health and market position. According to InvestingPro data, Flowserve's market capitalization stands at $5.94 billion, reflecting its significant presence in the flow control industry.
The company's P/E ratio is currently at 23.22, suggesting that investors are willing to pay a premium for Flowserve's earnings, potentially due to expectations of future growth. This aligns with one of the InvestingPro Tips that indicate net income is expected to grow this year. Moreover, Flowserve has shown a strong revenue growth of 13.39% over the last twelve months as of Q2 2024, which may further justify the higher P/E ratio.
An additional InvestingPro Tip highlights that Flowserve has maintained dividend payments for 18 consecutive years, with a dividend yield of 1.86% as of the most recent data. This demonstrates the company's commitment to providing consistent returns to shareholders, a factor that might be particularly appealing to income-focused investors.
For those looking to delve deeper into the company's performance and forecasts, InvestingPro offers a range of additional tips. In fact, there are 5 more tips available on the platform that can provide valuable insights into Flowserve's financial prospects and operational efficiency.
With the acquisition of MOGAS poised to potentially enhance Flowserve's aftermarket opportunities and revenue streams, these financial metrics and professional analyses are essential tools for investors to assess the company's future potential. For more detailed analysis and tips, including those not covered in this article, interested readers can visit https://www.investing.com/pro/FLS.
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