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Acquisitions bolster John Crane
Pump Industry Analyst
FLOWSERVE ENDS WEIR TAKEOVER BID Flowserve Corporation has withdrawn its proposal to acquire Scotland-based Weir Group pk. Dallas-based Flowserve had been reviewing its position since Weir rejected its acquisition bid (see Pump Industry Analyst, March 1999). Bernard G Rethore, Flowserve’s chairman, president and CEO, confirmed that they had no current plans to make a takeover offer for Weir. Rethore explained that the strategic fit between the two companies was so attractive that Flowserve had to seriously explore a deal with Weir. Rethore said that Weir’s current price expectations made it impossible to proceed prudently on a basis consistent with Flowserve’s commitment to build value for its shareholders. “Though our interest in Weir has concluded at this time, Flowserve continues to seek out appropriate opportunities that will help us achieve our goal of making PIIdent, strategic acquisitions to generate increased growth and savings through economies of scale.”
ACQUISITIONS BOLSTER JOHN CRANE Despite mixed trading in some of its industrial markets, John Crane, the sealing systems specialist, has reported another successful year for 1998. Sales were up 42 per cent at 5X85.6 million and operating profit increased 16 per cent to &76.0 million. At constant exchange rates and after adjusting for acquisitions and disposals, sales grew by 5 per cent. Operating profit increased 3 per cent on the same basis, slightly less than sales growth because of weaker process markets and adverse economic
April 1999
conditions in Asia Pacific and Latin America. John Crane’s margin declined mainly due to the impact of acquisitions made during the year. Mechanical Seals achieved organic growth in sales and profit in mixed markets, particularly among process industry customers. During the year three significant acquisitions were integrated: Safematic, Seal01 and the fluid technology businesses of EIS. John Crane’s OEM business saw demand from process pump manufacturers soften, reflecting weaker process industry markets, but sales of gas compressor seals were strong, particularly in the first half of the year. Aftermarket demand remained mixed across industry segments with firm activity in Europe and North America offsetting weakness in Asia Pacific and Latin America. Marine established itself as a world leader in the supply of integrated marine propulsion systems with the acquisition of Lips United, completed in June. The Seal01 marine product business and the marine couplings products of EIS and the increase in the group’s shareholding in Japan Marine Technologies have added momentum. Parent company TI Group achieved organic growth in sales of 9 per cent and profit of 10 per cent. In a separate statement, TI Group announced the placing of 23.6 million ordinary shares with KKR and the appointment of Henry R Kravis to the board of TI Group. For further details, see page 1.
HASKEL SOLD TO PRIVATE FUND In a US$72.8 million transaction, Haskel International is to be acquired by Tinicum Capital Partners LP, a private investment fund, and certain related parties. Haskel shareholders will receive a cash price of US$l2.90 per share. Once the tender offer has been accepted,
Haskel will merge with HI Merger Subsidiary, a subsidiary of HI Holdings Inc. The deal should be completed in May 1999, if 90 per cent of the shares are tendered, or July 1999 if a merger approved by the shareholders is required. The boards of directors of both companies have approved the transaction, and the Haskel board has recommended that its shareholders accept HI Holdings Inc’s all-cash tender offer and vote in favour of the merger if a vote is required. Haskel manufactures highpressure liquid pumps and gas boosters, specialising in pressure technology and systems integration.
ITT INDUSTRIES STRENGTHENS WHIRLPOOL OPERATIONS ITT Industries Inc has signed a preliminary agreement to acquire Hydro Air Industries Inc, a manufacturer of jets, fittings and accessories for the whirlpool bath, spa, and swimming pool markets. “We believe the combination of ITT Industries’ Marlow Leisure Products business and Hydro Air’s will create a stronger and more competitive product offering, enhanced product design capability, and access to a much larger customer base,” said Brenda Reichelderfer, president of ITT Industries’ fluid specialty group. “This acquisition will allow us for the first time to offer complete pump and accessory kits to the whirlpool bath market. It will also allow us to enter the spa market, thus opening up a new channel for our pumps.” The company estimates that the worldwide annual market for spa and whirlpool bath pumps and accessories is worth more than US$400 million, with the US whirlpool bath market worth approximately US$90 million.
Editorial Office Elsevier Advanced Technology PO Box 150 Kidlington Oxford OX5 1AS United Kingdom Tel: +44 (0)1865 843695 Fax: +44 (0)1865 843971 E-mail: [email protected] Editor Roisin Reidy Permissions may be sought directly from Elsevier Science Ri hts B Permissions Department, P9, Box 800, Oxford OX5 IDX, UK; phone: (+44) 1865 843830, fax: (+44) 1865 853333, e-mail: permissions Oelsevier.co.uk.You may also contact Rights & Permissions directly throu h Elsevier’s home page (http: 3/www.elsevier.nl), selecting first ‘Customer Support’, then ‘General Information’, then Permissions Query Form’. In the USA, users may clear permissions and make through the Cop right learance Center, Inc., 222 Y;’ osewood Drive, lzayments Danvers, MA 01923, USA: phone: (978) 7606400, fax: (978) 7504744, and in the UK through the Copyright Licensing Agency Rapid Clearance Service (CLARCS), 90 Tottenham Court Road, London WI P OLP, UK; phone: (+44) 171 436 5931; fax (+44) 171 436 3986. Other countries may have a local reprographic rights agency for payments. Derivative Works Subscribers may reproduce tables of contents or prepare lists of articles including abstracts for internal circulation within their institutions. Parmission of the publisher is required for resale or distribution outside the institutiin. Permission of the publisher is required for all other derivative works, including compilations and translations. Electronic Storage or Usage Permission of the publisher is raquired to store or use electronically any material contained in this journal, including any article or part of an article. Contact the publisher at the address indicated. Except as outlined above, no part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the publisher. Address permissions requests to: Elsevier Science Rights 8 Permissions Department, at the mail, F;ovzd e-mail addresses noted Notice No responsibility is assumed by the Publisher for ‘any injury and/or damage to persons or property as a matter of products liability, negliQence or otherwise, or from any use or operation of any methods, products, instructions or ideas contained in the material herein. Because of rapid advances in the medical sciences, in particular, independent verification of diag ;;;;. and drug dOSages should be Although all advertising material is expected to conform to ethical (medical) standards, inclusion in this publication does not constitute a guarantee or endorsement of the quality or value of such product or of the claims made of it by its manufacturer.
02167 Printed by Maytield
Press
(Oxford)
Limited,
UK.
FLOWSERVE ENDS WEIR TAKEOVER BID Flowserve Corporation has withdrawn its proposal to acquire Scotland-based Weir Group pk. Dallas-based Flowserve had been reviewing its position since Weir rejected its acquisition bid (see Pump Industry Analyst, March 1999). Bernard G Rethore, Flowserve’s chairman, president and CEO, confirmed that they had no current plans to make a takeover offer for Weir. Rethore explained that the strategic fit between the two companies was so attractive that Flowserve had to seriously explore a deal with Weir. Rethore said that Weir’s current price expectations made it impossible to proceed prudently on a basis consistent with Flowserve’s commitment to build value for its shareholders. “Though our interest in Weir has concluded at this time, Flowserve continues to seek out appropriate opportunities that will help us achieve our goal of making PIIdent, strategic acquisitions to generate increased growth and savings through economies of scale.”
ACQUISITIONS BOLSTER JOHN CRANE Despite mixed trading in some of its industrial markets, John Crane, the sealing systems specialist, has reported another successful year for 1998. Sales were up 42 per cent at 5X85.6 million and operating profit increased 16 per cent to &76.0 million. At constant exchange rates and after adjusting for acquisitions and disposals, sales grew by 5 per cent. Operating profit increased 3 per cent on the same basis, slightly less than sales growth because of weaker process markets and adverse economic
April 1999
conditions in Asia Pacific and Latin America. John Crane’s margin declined mainly due to the impact of acquisitions made during the year. Mechanical Seals achieved organic growth in sales and profit in mixed markets, particularly among process industry customers. During the year three significant acquisitions were integrated: Safematic, Seal01 and the fluid technology businesses of EIS. John Crane’s OEM business saw demand from process pump manufacturers soften, reflecting weaker process industry markets, but sales of gas compressor seals were strong, particularly in the first half of the year. Aftermarket demand remained mixed across industry segments with firm activity in Europe and North America offsetting weakness in Asia Pacific and Latin America. Marine established itself as a world leader in the supply of integrated marine propulsion systems with the acquisition of Lips United, completed in June. The Seal01 marine product business and the marine couplings products of EIS and the increase in the group’s shareholding in Japan Marine Technologies have added momentum. Parent company TI Group achieved organic growth in sales of 9 per cent and profit of 10 per cent. In a separate statement, TI Group announced the placing of 23.6 million ordinary shares with KKR and the appointment of Henry R Kravis to the board of TI Group. For further details, see page 1.
HASKEL SOLD TO PRIVATE FUND In a US$72.8 million transaction, Haskel International is to be acquired by Tinicum Capital Partners LP, a private investment fund, and certain related parties. Haskel shareholders will receive a cash price of US$l2.90 per share. Once the tender offer has been accepted,
Haskel will merge with HI Merger Subsidiary, a subsidiary of HI Holdings Inc. The deal should be completed in May 1999, if 90 per cent of the shares are tendered, or July 1999 if a merger approved by the shareholders is required. The boards of directors of both companies have approved the transaction, and the Haskel board has recommended that its shareholders accept HI Holdings Inc’s all-cash tender offer and vote in favour of the merger if a vote is required. Haskel manufactures highpressure liquid pumps and gas boosters, specialising in pressure technology and systems integration.
ITT INDUSTRIES STRENGTHENS WHIRLPOOL OPERATIONS ITT Industries Inc has signed a preliminary agreement to acquire Hydro Air Industries Inc, a manufacturer of jets, fittings and accessories for the whirlpool bath, spa, and swimming pool markets. “We believe the combination of ITT Industries’ Marlow Leisure Products business and Hydro Air’s will create a stronger and more competitive product offering, enhanced product design capability, and access to a much larger customer base,” said Brenda Reichelderfer, president of ITT Industries’ fluid specialty group. “This acquisition will allow us for the first time to offer complete pump and accessory kits to the whirlpool bath market. It will also allow us to enter the spa market, thus opening up a new channel for our pumps.” The company estimates that the worldwide annual market for spa and whirlpool bath pumps and accessories is worth more than US$400 million, with the US whirlpool bath market worth approximately US$90 million.
Editorial Office Elsevier Advanced Technology PO Box 150 Kidlington Oxford OX5 1AS United Kingdom Tel: +44 (0)1865 843695 Fax: +44 (0)1865 843971 E-mail: [email protected] Editor Roisin Reidy Permissions may be sought directly from Elsevier Science Ri hts B Permissions Department, P9, Box 800, Oxford OX5 IDX, UK; phone: (+44) 1865 843830, fax: (+44) 1865 853333, e-mail: permissions Oelsevier.co.uk.You may also contact Rights & Permissions directly throu h Elsevier’s home page (http: 3/www.elsevier.nl), selecting first ‘Customer Support’, then ‘General Information’, then Permissions Query Form’. In the USA, users may clear permissions and make through the Cop right learance Center, Inc., 222 Y;’ osewood Drive, lzayments Danvers, MA 01923, USA: phone: (978) 7606400, fax: (978) 7504744, and in the UK through the Copyright Licensing Agency Rapid Clearance Service (CLARCS), 90 Tottenham Court Road, London WI P OLP, UK; phone: (+44) 171 436 5931; fax (+44) 171 436 3986. Other countries may have a local reprographic rights agency for payments. Derivative Works Subscribers may reproduce tables of contents or prepare lists of articles including abstracts for internal circulation within their institutions. Parmission of the publisher is required for resale or distribution outside the institutiin. Permission of the publisher is required for all other derivative works, including compilations and translations. Electronic Storage or Usage Permission of the publisher is raquired to store or use electronically any material contained in this journal, including any article or part of an article. Contact the publisher at the address indicated. Except as outlined above, no part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the publisher. Address permissions requests to: Elsevier Science Rights 8 Permissions Department, at the mail, F;ovzd e-mail addresses noted Notice No responsibility is assumed by the Publisher for ‘any injury and/or damage to persons or property as a matter of products liability, negliQence or otherwise, or from any use or operation of any methods, products, instructions or ideas contained in the material herein. Because of rapid advances in the medical sciences, in particular, independent verification of diag ;;;;. and drug dOSages should be Although all advertising material is expected to conform to ethical (medical) standards, inclusion in this publication does not constitute a guarantee or endorsement of the quality or value of such product or of the claims made of it by its manufacturer.
02167 Printed by Maytield
Press
(Oxford)
Limited,
UK.