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    SPX   GB00BWFGQN14

SPIRAX-SARCO ENGINEERING PLC

(SPX)
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Spirax-Sarco to buy thermal tech firm Chromalox for $415 million

05/26/2017 | 03:36am EDT

(Reuters) - Britain's Spirax-Sarco Engineering Plc said it had agreed to buy Pittsburgh-based thermal technology company Chromalox Inc from private equity firm Irving Place Capital for $415 million (322.3 million pounds) on a cash-free, debt-free basis.

Spirax-Sarco, which makes steam traps and pumps for industries such as food and beverage, healthcare, chemical and power generation, said the purchase consideration would be financed from new debt facilities supplied by its existing banks.

Shares in Spirax were up 5.6 percent at 5,605 pence at 0709 GMT, making the stock the second largest gainer on London's Midcap Index

The acquisition of Chromalox, which has five manufacturing facilities across North America, France and China, will add to Spirax's earnings in 2017, it said.

Liberum analysts, rating Spirax at "hold", wrote in a note that at first look, this deal would add to 2017 EPS by 13 percent, assuming no growth in the underlying business.

Chromalox earns about 18 percent of its sales from the oil and gas market where firms are cautious on spending as the industry recovers from a multi-year commodity price slump.

However, current order intake levels and market activity have shown improving prospects for Chromalox, Spirax said, adding its estimates sales of $190 million in the current year ending September.

Analysts at Jefferies, who have a "hold" rating on Spirax, said Chromalox looks to be a "highly complementary business" and a "very sensible/interesting deal".

The price tag of $415 million makes this Spirax's largest buy since the downturn of 2008. Last month Spirax said it would buy German firm Gestra AG, which makes valves and control systems for heat and fluid control, for 186 million euros (161.5 million pounds).

Chromalox will bring thermal energy management solutions to Spirax's customers, the British firm said, adding it would expand Spirax's total addressable market by 2.1 billion pounds to 7.9 billion pounds.

"We will invest in Chromalox to strengthen its direct sales channels globally; leverage our worldwide footprint to grow Chromalox's presence outside of its core markets in the USA," Spirax-Sarco said in a statement on Friday.

Completion of the deal is subject to a nod from the U.S. merger control authority, Spirax said, adding that the conditions are expected to be satisfied during its current quarter.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Sunil Nair)

By Noor Zainab Hussain


ę Reuters 2017
Stocks mentioned in the article
ChangeLast1st jan.
MANAGEMENT SOLUTIONS CO.,LTD. -2.88% 2598 End-of-day quote.33.30%
NEXT PLC -1.77% 7896 Delayed Quote.13.43%
ONE STOP SYSTEMS, INC. 5.45% 5.42 Delayed Quote.35.50%
SPIRAX-SARCO ENGINEERING PLC -0.90% 14875 Delayed Quote.32.98%
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Financials
Sales 2021 1 356 M 1 891 M 1 891 M
Net income 2021 214 M 299 M 299 M
Net Debt 2021 166 M 232 M 232 M
P/E ratio 2021 51,8x
Yield 2021 0,86%
Capitalization 11 071 M 15 365 M 15 441 M
EV / Sales 2021 8,29x
EV / Sales 2022 7,81x
Nbr of Employees 7 846
Free-Float 98,7%
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Technical analysis trends SPIRAX-SARCO ENGINEERING PLC
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TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
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Mean consensus HOLD
Number of Analysts 17
Last Close Price 15 020,00 GBX
Average target price 11 725,00 GBX
Spread / Average Target -21,9%
EPS Revisions
Managers and Directors
Nicholas John Anderson CEO, COO & Executive Director
Nimesh Balvir Patel Chief Financial Officer & Executive Director
Jamie Robert Provan Pike Chairman
G. E. Schoolenberg Senior Independent Non-Executive Director
Jane S. Kingston Independent Non-Executive Director
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