Spirax-Sarco agrees to buy Gestra for £160m

Steam, peristaltic pumping and fluid path technology specialist Spirax-Sarco Engineering announced on Monday that it signed a conditional sale and purchase agreement to acquire Gestra AG and associated businesses from Flowserve Corporation for a cash-free, debt-free consideration of €186m (£160m).

The FTSE 250 firm said Gestra, which has its headquarters in Bremen, Germany, is a technology leader in advanced industrial boiler control systems and specialises in the design and production of valves and control systems for steam and fluid process control.

In 2016, Gestra recorded revenues of €92.5m, EBITDA of €16.6m and EBIT of €15.2m.

Approximately 80% of the company's revenues were in Europe with the balance spread roughly evenly between the Americas and Asia Pacific.

At 31 December 2016, Gestra's gross assets were €66.8m.

Spirax-Sarco said Gestra was highly complementary to the steam specialties business, and would enhance and accelerate the implementation of the board’s strategy for growth, as a result of its well-developed capabilities in a wide range of industries and applications.

Due to its perceived strong brand, Gestra would be operated alongside the Spirax-Sarco Steam Specialties business, targeting global growth in its key market sectors through the coordinated application of the knowledge and strengths of both businesses, the board explained.

Spirax-Sarco would invest in Gestra's product and market development to extend its “world-leading” customer value proposition to an enlarged addressable market.

The purchase consideration would be financed from a combination of existing cash resources and debt facilities, and the acquisition would be accretive to Group earnings in 2017 but was expected to have a slightly dilutionary impact on the group profit margin in the current year.

Completion remained subject to certain customary conditions, including regulatory approval of the transaction by the Bundeskartellamt in Germany.

Spirax-Sarco believed those conditions would be satisfied during the current quarter.

“We are delighted to be bringing Gestra, its management and employees into the Spirax-Sarco family,” said chief executive Nicholas Anderson.

“Our businesses are highly complementary - Gestra will enhance the market and product offering of Spirax-Sarco and will benefit from our global footprint and broader product range.

“We believe that this combination will deliver enhanced value to both customers and shareholders.”