Montreal-based Velan, a manufacturer of high-tech industrial valves, has been acquired by a Texas-based industrial plumbing company, Flowserve, for an announced sum of C$329 million, which will be paid in cash.
Founded in Montreal in 1950, and still under the control of the founding family, Velan is considered one of the world’s leading manufacturers of industrial valves. Listed on the Toronto Stock Exchange (VLN), Velan employs approximately 1,650 people and operates factories in 9 countries.
According to its most recent quarterly results, Velan was lined up for annualized revenue of $380 million, down 3% from a year earlier. Velan was also heading for an annual pre-tax profit of around US$19 million, down a likely 23% year-on-year.
For its part, Flowserve, based in Dallas, Texas, is a supplier of industrial plumbing products and services with operations in some fifty countries.
Listed at US$4.4 billion on the New York Stock Exchange, Flowserve ended its 2022 fiscal year with pre-announced revenue of around US$3.6 billion, with an order book up 30% annualized to 2.7 billion US.
In its announcement of the purchase of Velan in Montreal, Flowserve’s senior management states that it wants to maintain a “significant presence in Quebec, including Velan’s head office in Montreal. »
But in its announcement to its shareholders, Flowserve also indicates that it anticipates operating cost synergy savings of around $20 million in the two years following the closing of the Velan acquisition transaction.
For Velan shareholders, who will be asked to vote at a special meeting on this transaction, which has already been approved by the Board of Directors, the cash purchase price of C$13 agreed to with Flowserve represents a premium of just over 100% relative to the 30-day average price of Velan shares on the Toronto Stock Exchange.