Mergers & Acquisitions in the Global Valves Industry – September 2008


Surging demand in emerging Asian economies is continuing to drive the growth in the markets for all flow control products. With the insatiable thirst for natural resources from countries such as China and India, suppliers to the process industries are expanding both their global footprint and engineering expertise.

Indeed, recent Frost & Sullivan report has estimated that the market for industrial valves and actuators alone will grow from $26.7bn in 2007 to $49bn in 2014.

As well as the rising demand for resources, government regulations on emissions control and plant safety are having a knock-on effect on the process industries. The upgrading and retrofitting of products in order to comply with new legislation provides yet further opportunities for companies operating in more mature markets.

A noticeable feature of the markets in Asia is the rapid uptake of increasingly sophisticated plant automation. In order to respond to domestic demand and compete with more established Western players, customers in countries across the Middle East and Asia are investing heavily in process control equipment in order to boost their productivity and also minimize the risks of plant downtime. This plays into the hands of valve suppliers who focus on product reliability and a highly differentiated product portfolio, be this in terms of application or service offering.

Whilst we await an upsurge in mergers and acquisitions in the Asian valve market in response to these trends, we can focus on the flurry of transactions happening elsewhere in the world. Emerson, for example, has continued its strategy of acquiring small, niche players that complement its existing operations with the addition of TopWorx Inc, a US supplier of valve control and position sensing solutions for plants, platforms and pipelines.

Emerson will integrate TopWorx into its Process Management division where it will enhance the group’s valve instrument offering for production, processing and distribution activities in the chemical, food and beverage, oil and gas, pharmaceutical, power generation, refining and water industries. It will complement Emerson’s PlantWeb automation solutions and supplement its portfolio of products that ensure durability and reliability in corrosive and explosive environments, as well as those subject to extreme temperatures.

Niche suppliers of products are also seeing continued interest from private equity firms. In fact, two valve Italian manufacturers have recently been the subject of private equity-backed deals. Investcorp has acquired Ceme SpA, a manufacturer of pressure switches, pumps, safety valves and solenoid valves for a range of industries including commercial and domestic appliances, as well as industrial gas transfer, refrigeration, water and welding applications. The company was acquired from Barclays Private Equity and under its new ownership it intends to continue its strategy of making bolt-on acquisitions.

Meanwhile, 21 Investimenti has backed acquired a 50% stake in Velan Inc’s Italian valve manufacturing subsidiary in a $55m deal. The company is a manufacturer of trunnion mounted ball valves and will be renamed Valbart following the buyout. 21 Investimenti, an Italian private equity firm, has acquired the 50% stake previously owned by Velan of Canada with the remaining 50% of the company owned by its management team.

Private equity transactions are also seeing investors selling highly profitable assets in order to realise their returns, as seen with the French manufacturer and distributor of valves and fittings, Fluides Technique Services SA (FTS). The company has been the subject of a secondary management buy-out in an all-debt deal funded by Acto Mezzanine. FTS is a distributor of valves and fittings for the HVAC and industrial markets which was previously owned by Quartus, a French private equity firm.

Turning to corporate acquisitions, Cameron Corp has completed a deal to acquire the DynaTorque product range from Hines Corp. DynaTorque is a designer and manufacturer of manual gear operators and specialty products such as mechanical partial stroke test devices for use with actuators, dampers and valves. The business will form part of Cameron’s Flow Control division which is a supplier of quarter-turn and linear actuators, safety systems and surface and subsea chokes within its Drilling and Production Systems group.

Also in the US, Industrial Controls Distributors LLC, a distributor of HVAC controls, process instrumentation and industrial automated valves, has merged with Climatic Control Co, a distributor of control products for the combustion, HVAC, process and refrigeration industries. The combined group is now a leading US distributor of HVAC controls, industrial automated valves and process instrumentation.

For more information on mergers and acquisitions activity in the valve industry, contact Constantine Biller our industrial product analyst who has unparalleled links to corporate decision-makers in the worldwide flow technologies and valves industry.

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