* Cardo Flow Solutions is full-line supplier of pumps
* Wastewater is one of the largest markets for pumps
* Sulzer balance sheet to remain strong, can do more buys
* Sulzer shares rise more than 4 percent
(Adds shares, analyst comment)
ZURICH, April7 (Reuters) - Swiss engineering group Sulzer has agreed to buy a Sweden-based water pumps business for 858 million Swiss francs ($927.3 million) in cash, giving it access to the fast-growing wastewater market.
The acquisition of Cardo's Flow Solutions business from Assa Abloy, Sulzer's biggest buy in recent years, will be financed with cash on hand and available debt, Sulzer said in a statement on Thursday.
The group added its balance sheet would remain strong, allowing for more acquisitions.
At 0904 GMT, Sulzer shares were trading 4.2 percent stronger, outperforming a 0.3 percent rise in the Swiss midcap index..
"It definitely makes sense to diversify into new markets, especially if they are expected to grow above average in the foreseeable future," Kepler Capital Markets analyst Christoph Ladner said, but he added the deal looked rather pricey.
Sulzer is paying 12.8 times 2010 earnings before interest, tax, depreciation and amortisation (EBITDA) for the deal.
Sulzer makes pumps for the oil and gas industry as well as surface coatings for jet engines and said the buy would help make water and wastewater one of its key markets, making up around 16 percent of total sales.
Wastewater is one of the largest markets for pumps and has an estimated market size of around 4 billion francs and expected long-term growth rates through the cycle of over 5 percent each year, Sulzer said.
"The wastewater market offers strong growth prospects in both mature and emerging markets, driven by long-term trends such as population growth, increasing water consumption, urbanisation, and environmental protection," the group said.
Assa Abloy acquired Flow Solutions when it bought Cardo at the end of last year. Assa, the world's biggest lock maker, said at the time Cardo's wastewater and pulp and paper unit did not fit its business profile and that it would look at divesting them.
Assa shares were up 0.4 percent at 0904 GMT, outperforming the wider Stockholm index which was down 0.4 percent.
Cardo's flow solutions business had sales of around 463 million francs last year and a margin of 14.5 percent on an earnings before interest, tax, depreciation and amortisation level (EBITDA). ($1=.9252 Swiss Franc) (Reporting by Katie Reid; Editing by Jon Loades-Carter)