Ingersoll Rand originally wanted all of SPX Flow, but it appears it’s settling for a small chunk.
On Oct. 6, global pumps and compressors maker Ingersoll Rand announced that it has reached a deal to acquire SPX’s Air Treatment business for approximately $525 million. It comes after SPX announced in July 2021 that it had rejected IR’s sweetened $3.59 proposal to buy all of SPX — which SPX said significantly undervalued the company and its future growth prospects.
But the two sides have found an agreement for SPX’s Air Treatment business, which is a major producer of desiccant and refrigerated dryers, filtration systems and purifiers for dehydration in compressed air. The business unit, which has expected 2022 revenues of approximately $180 million, has manufacturing capabilities in the U.S., Germany and South Korea behind nearly 500 employees. It goes to market through the brands of Hankison, Pneumatic Products, Jemaco, Deltech and Delair.
“Our customers lean on us to deliver innovative technologies that drive reliability, efficiency, performance and excellence,” said Vicente Reynal, IR chairman and CEO, in a news release. “Compressed air dryer and filtration equipment helps increase the production and process reliability of the compressor and continues our strategy of expanding our product offerings in the broader compressor ecosystem. The business is highly complementary and we expect it to be driven by the same sustainability trends that we see as a tailwind for our compressor business.”
The deal is expected to close in 2022’s fourth quarter, pending regulatory approvals. Upon closing, the SPX Flow Air Treatment business would join IR’s IT&S segment.
Charlotte, North Carolina-based SPX Flow was divested out of air conditioning and power equipment manufacturer SPX Corp in 2015. The company provides process technologies that perform mixing, blending, fluid handling, separation, thermal heat transfer and other activities integral to processes performed across a wide variety of markets for nutrition, health and precision solutions. SPX had approximately $1.5 billion in 2021 revenue.
“Not only does the acquisition add a highly complementary product portfolio, nearly half of its revenue is from recurring aftermarket offerings – one of our critical strategic acquisition criteria,” Reynal continued. “We expect the strong strategic fit to quickly yield adjusted EBITDA margins accretive to the IT&S segment and drive significant synergies that are expected to result in adjusted EBITDA margins greater than 30% by year three.”
Earlier this week on Oct. 3, Ingersoll Rand also announced a $90 million acquisition of Dosatron International, a Clearwater, Florida-based technology solutions provider of water-powered dosing pumps and systems selling into markets of hydroponics, horticulture, animal leahth, food safety and sanitation, and water treatment. Dosatron has approximately 45 employees and will join IR’s Precision and Science Technologies segment. The deal includes additional future purchase price consideration of up to $15 million.