【2025 Industrial Automation Updates】Flowserve to merge on an equal footing with Chart Industries

Chart Industries, Inc. is a globally leading manufacturer of engineering equipment, specializing in cryogenic and low-temperature technologies, and serving the fields of clean energy, industrial gases, and low-carbon transformation. Its core business is to provide highly engineered solutions for the production, storage, transportation, and application of liquefied gases. Its four business divisions serve a variety of application scenarios: 1) Cryogenic storage tank solutions such as cryogenic tanks, ISO containers, LNG filling stations, and marine fuel systems, which are used for the storage and transportation of industrial gases and LNG ； 2) Heat transfer systems such as brazed aluminum heat exchangers, cryogenic tanks, and pressure vessels, used for optimizing energy efficiency in processes like natural gas liquefaction and hydrogen production. 3) Special products such as liquid hydrogen storage and transportation equipment, vacuum insulated pipelines, carbon dioxide capture systems, etc., designed for specific markets such as hydrogen energy, carbon capture, and food and beverage industries. 4) It provides equipment maintenance, 24/7 technical support, and leasing services to extend the equipment’s lifespan and reduce customers’ operational costs. Its typical application areas include the hydrogen industry, LNG virtual pipelines, industrial gases and emission reduction, LNG export terminals, and floating LNG facilities. It has 11 factories worldwide (3 of which are located in Changzhou, China).

Founded in 1912, Flowserve’s main products include pumps, valves, seals, automation systems, as well as after-sales and engineering services. Its products are used in industries such as oil and gas, chemicals, power generation, water management, carbon capture, and general manufacturing. With operations in over 50 **/regions around the world, it has a global workforce of more than 16,000 people. In October 2024, Flowserve acquired Mogas for $290 million; Flowserve’s total sales for that year were $4.558 billion. Flowserve has offices in Beijing and Shanghai in China, with its factory located in Suzhou, where it primarily produces valves and pump products.

The enterprise value of the combined company is estimated to be around $19 billion. ChartFlowserve.com is a joint website created specifically for this merger. The merged company will have an installation base of over 5.5 million devices in more than 50 countries around the world, enabling it to meet the needs of customers throughout their entire lifecycle, from process design to after-sales support. As of the end of the first quarter of 2025, based on data from the last twelve months, the combined company achieved net revenue of approximately $8.8 billion, operating in various high-growth, attractive end markets; of this amount, approximately $3.7 billion came from after-sales services, accounting for around 42% of the total combined revenue. Under the agreement, the boards of directors of both parties have unanimously approved the transaction. Upon completion of the transaction, Chart shareholders will receive 3.165 shares of Flowserve common stock for each share of Chart common stock held. Upon completion of the transaction, Chart shareholders are expected to hold approximately 53.5% of the shares in the combined company, while Flowserve shareholders will hold approximately 46.5%, based on fully diluted equity.

■ A world-class, differentiated portfolio of comprehensive solutions: This merger combines Chart’s leadership in process technologies such as compression, thermal energy, cryogenics, and specialty solutions, with Flowserve’s core expertise in fluid management. Integrating the digital platforms of the two companies will further enhance the differentiation of the overall solutions, providing comprehensive digital solutions that include monitoring and forecasting functions.

■ Diversified and attractive end-market presence: Following the merger, the company will hold a leading position in various end markets, including general industry, industrial gases, data centers, aerospace, transportation, nutrition, carbon capture, energy, power generation, nuclear energy, chemicals, liquefied natural gas, water treatment, mining, and mineral processing. Such a broad and balanced market distribution will make the company more predictable and resilient to risks.

■ Expanded after-sales market platform: The merged company will have a stable source of recurring revenue, with over 5.5 million devices installed globally, 42% of whose revenue comes from after-sales and service activities. By expanding their global installation base and geographic coverage, Chart and Flowserve aim to offer customers a wider range of services and solutions, thereby driving growth in their after-sales business.

■ Significant cost and business synergy potential: It is estimated that within three years after the completion of the transaction, the merger will generate annual cost synergies of around $300 million, primarily resulting from savings in material purchases, consolidation of facilities, improved organizational efficiency, and the elimination of duplicate costs associated with being a publicly listed company. Furthermore, the company expects to achieve business revenue synergies equivalent to at least 2% of the increased revenue of the combined company over time.

■ A solid capital structure and strong cash flows: The merger is expected to have a positive impact on adjusted earnings per share in the first year following the completion of the transaction. The leverage ratio of the combined company is expected to be 2.0 times, based on the ratio of net debt to adjusted EBITDA, at the time of closing. Over the past 12 months ending March 31, 2025, Chart and Flowserve combined to generate $1.8 billion in cash flow. This strong financial position will support a balanced capital allocation strategy, including deleveraging, prioritizing growth investments, and returning capital to shareholders. The combined company is expected to maintain quarterly dividends at the same level as Flowserve’s historical per-share dividend, and is likely to reduce interest expenses by optimizing its financing structure.

■ Headquarters and brand arrangement: Upon completion of the transaction, the headquarters of the merged company will be located in Dallas, with offices planned to be established in Atlanta and Houston. Operations will be carried out through a business network present in over 50 countries around the world. After the merger, the company will adopt a new name and brand identity.

■ Transaction timeline and conditions: The transaction is expected to be completed in the fourth quarter of 2025, subject to the approval of Chart’s and Flowserve’s respective shareholders, regulatory approvals, and the fulfillment of other standard closing conditions.