Chart Industries, Inc. (NYSE: GTLS) and Flowserve Corporation (NYSE: FLS) announced a definitive agreement to merge in an all-stock transaction valued at approximately $19 billion. This strategic merger aims to create a global leader in industrial process technologies, combining both companies’ expertise in fluid motion and control solutions.
Overview of the Merger
Under the terms of the agreement, Chart shareholders will receive 3.165 Flowserve shares for each Chart share they own. Post-merger, Chart shareholders will hold approximately 53.5% of the combined entity, while Flowserve shareholders will own about 46.5%. The merged company will be led by Flowserve’s current CEO, Scott Rowe, with Chart’s CEO, Jill Evanko, serving as the Chair of the Board.
Company Profiles
Chart Industries, Inc.
Chart Industries is a leading global manufacturer of highly engineered equipment servicing multiple applications in the energy and industrial gas markets. The company’s product portfolio includes solutions for liquefied natural gas (LNG), hydrogen, biogas, and carbon dioxide capture, among others. Chart operates over 25 global locations, emphasizing its commitment to environmental, social, and corporate governance (ESG) principles.
Flowserve Corporation
Flowserve is a prominent provider of fluid motion and control products and services, including pumps, valves, and mechanical seals. The company serves various industries, such as water, chemicals, and energy, operating in more than 300 locations across over 50 countries. Flowserve’s offerings are integral to critical applications worldwide.
Strategic Rationale
The merger is positioned as a “merger of equals,” aiming to leverage the complementary strengths of both companies. Key strategic benefits include:
- Enhanced Product Portfolio: Combining Chart’s expertise in cryogenic equipment with Flowserve’s fluid motion and control solutions to offer a comprehensive suite of products.
- Global Reach: Expanding the combined company’s presence across diverse markets and geographies.
- Operational Synergies: Anticipated annual cost savings of approximately $300 million within three years post-merger.
- Aftermarket Services: Strengthening aftermarket services, which currently represent about 42% of the combined revenues as of Q1.
Financial Implications
The merger is expected to be accretive to the combined company’s adjusted earnings per share in the first year. The transaction will maintain Flowserve’s historical dividend, and the combined entity is committed to an investment-grade balance sheet and robust cash flow to support growth, deleveraging, and shareholder dividends.
Market Positioning
By uniting their capabilities, Chart Industries and Flowserve aim to create a differentiated leader in industrial process technologies. The combined company will be well-positioned to compete more effectively with industry giants like Dover and Ingersoll Rand.