Pump Industry Analyst

January 2003

Mergers and Acquisitions Review 2002

The pump sector maintained its consolidation momentum during 2002. Cross-border deals were commonplace, as pump companies added technologies and product lines and expanded into new markets. The majority of the deals were niche-type acquisitions, with an increase in the number of product lines rather than companies being acquired, as post-acquisition integration measures led many pump companies to regroup and refine their product lines, divesting non-core operations and overlapping manufacturing units.

Company

Activity
Fourth quarter 2002

Comment

ITT Industries Idex

Acquired the assets of PCI Membranes from Thames Water (see Pump Industry Analyst, January 2003). Acquired Wrightech Corp, a Waukesha, Wisconsin-based manufacturer of stainless steel positive displacement pumps (see Pump Industry Analyst, December 2002). Sold Tarby Inc to Robbins & Myers (see Pump Industry Analyst, December 2002). Acquired the rights to part of Svanehjs product range large in-line pumps, used in district heating and air-conditioning (see Pump Industry Analyst, December 2002). Signed an agreement with Westinghouse Government Services Co LLC, for the acquisition of its Electro-Mechanical Division (EMD) (see Pump Industry Analyst, December 2002).

The deal should provide significant expansion opportunities for ITT Industries Sanitaire in the growing filtration and disinfection segments. Wrightech will operate as part of Idexs Viking Pump business unit.

Dover Resources

Claremore, Oklahoma-based Tarby makes progressing cavity pumps and components for the general industrial and municipal wastewater markets, and has annual industrial sales of approximately US$6 million. Grundfos will now be able to produce pumps with capacities of up to 4000 cubic metres per hour equipped with motors of up to 600 kW. Svanehj A/S is part of Hamworthy KSE Group Ltd. EMD manufactures highly engineered critical function electromechanical solutions, including pumps, for the US Navy, commercial nuclear power utilities, petrochemical and hazardous waste industries. EMD is the OEM for main coolant pumps and control rod drive mechanisms for 140 nuclear power plants worldwide designed by Westinghouse Electric Co. WCB, a unit of SPX Corp, supplies component equipment including positive displacement and centrifugal pumps, single seat and mixproof valves, tubular fittings, and scrape surface heat exchangers. The US$620 million cash sale is part of USFilters strategy to divest non-core assets. USFilters waterworks distribution business supplies pumps, pipes, hydrants, valves and meters through more than 140 sales and service centres in the US.

Grundfos

Curtiss-Wright

FEATURE

Waukesha Cherry-Burrell (WCB) USFilter

Acquired Robert James Production, a Buffalo, New York manufacturer of BPE and sanitary fittings (see Pump Industry Analyst, November 2002). Completed the sale of its waterworks distribution business to a company jointly owned by JPMorgan Partners, and Thomas H Lee Partners, a Boston-based private equity firm (see Pump Industry Analyst, October 2002). Third quarter 2002

Selwood Goup

Reverted to full management ownership, with the repurchase of 3i plcs share capital and other interests in the company (see Pump Industry Analyst, October 2002). Added a fourth core product group - membrane filtration - with the acquisition of Danish Separation Systems A/S (DSS), a membrane specialist in the biotech/pharmaceutical and the food industries (see Pump Industry Analyst, October 2002). Extended its water treatment product range with the purchase of Plymouth Products Inc of Sheboygan, Wisconsin, from USF Consumer & Commercial WaterGroup, a unit of Vivendi Environnement (see Pump Industry Analyst, October 2002). Bought the German vacuum pump specialist Werner Rietschle GmbH + Co KG for 85.5 million in cash and 1.8 million shares of Thomas Industries common stock (see Pump Industry Analyst, October 2002). Acquired Flowtronex PSI Inc, the Dallas-headquartered manufacturer of modular pumping systems for golf courses and other turf irrigation, sports fields, municipal and commercial properties (see Pump Industry Analyst, October 2002). Ended merger talks with Orbit Pump Manufacturing (Pty) Ltd and Orbit Pumps (Botswana) (Pty) Ltd (see Pump Industry Analyst, September 2002). Decided not to pursue the sale of Hertz Equipment Rental Corp (HERC) until valuations become more favourable (see Pump Industry Analyst, September 2002). Divested its Rail business area to Vestar Capital Partners, for a capital gain of SKr345 million (see Pump Industry Analyst, August 2002). Entered into a definitive agreement to acquire Rheodyne, the California-based manufacturer of injectors, valves, fittings and accessories for the analytical instrumentation market (see Pump Industry Analyst, August 2002).

This concludes 3is involvement with UK-based Selwood after eight years and gives Selwood management 100% ownership of the company. DSS has annual sales of about SKr90 million and 65 employees within R&D, manufacturing and sales operations.

Alfa Laval

Pentair

Given Pentairs existing water pump, pool and water treatment valve businesses, Plymouth Products significantly strengthens Pentairs position in the global water market. With very little product overlap, Thomas Industries sees great benefits from combining both companies expertise in engineering, manufacturing, marketing and distribution. The acquisition puts ITT Fluid Technology at the top of the turf irrigation market.

Thomas Industries

ITT Industries

Howden Pumps

The proposed merger would have resulted in a jointly-owned manufacturing and distributor business of agricultural, industrial and process pumps in Southern Africa. The delayed recovery in the equipment rental industry lay behind this decision. The deal freed up capital for a potential expansion in the companys Pump business area.

Ford Motor

Cardo

Idex

The company, which has annual sales of approximately US$23 million, will be operated as part of Idexs Pump Products Group.

10

January 2003

Pump Industry Analyst

Company
Crane

Activity
Acquired Corva Corp, a privately held distributor of valves and actuators with annual sales of approximately US$12 million (see Pump Industry Analyst, August 2002). Bought the assets of Washington Group International Incs Equipment and Services (E&S) Division (see Pump Industry Analyst, August 2002). Acquired Svedala Robot BV, a Dutch manufacturer of submersible pumps and pump systems used in wastewater applications, from Metso Minerals (see Pump Industry Analyst, August 2002). Second quarter 2002

Comment
Corva will be integrated with Cranes North America valve company.

Framatome ANP

E&S, headquartered in Denver, Colorado, specializes in fuel handling machines and transfer systems for both PWR and BWR nuclear power plants. Robot has annual sales of approximately 10 million and employs 75 people. Their pumps are expected to fuel additional growth for ITT Industries in the wastewater sector in the US, Europe and Asia.

ITT Industries

Sulzer Pumps

Expanded its US activities with the acquisition of selected assets of Sulzer Pumps said the acquisition fitted the Sulzer strategy of the service and repair company Centriflo Pump and Machine Co expanding its service business. based in Odessa, Texas, USA (see Pump Industry Analyst, July 2002). Acquired Waterlinks Pure Water Division, including the WET, CTreat and WETEC product lines (see Pump Industry Analyst, July 2002). Bought the Dutch company K&R (Kuyl & Rottinghuis) Pompen BV, (see Pump Industry Analyst, June 2002). Moved into mixers and flowmakers with the acquisition of the Swiss company Arnold AG, specialists in submersible mixers, flowmakers and recirculation pumps (see Pump Industry Analyst, June 2002). Bought Aermotor Pumps of Conway, Arkansas from Canadas GSW (see Pump Industry Analyst, June 2002). With annualized revenues of approximately US$16 million and 85 employees the Pure Water Division will function as an operating unit of ITT Sanitaire. With 19 employees, K&R Pompen has been a distributor of DESMI products in the Netherlands for more than 40 years. Based in Schachen, Arnold has an annual turnover of around DKr35 million and 20 employees. Aermotor manufactures water pumps and pump accessories for a variety of applications, including potable water, agriculture and irrigation, sump drainage, and sewage and effluent for the residential, industrial, commercial and mining markets.The company will become part of Sta-Rites Water Systems group. The US$535 million acquisition, which included the Edward, Limitorque, PMV, Argus and McCanna valve brands, created the worlds second largest valve company. The new company, Nash-Elmo, is now an international organization with over US$200 million in annual revenues and more than 1000 employees worldwide.

ITT Industries

A/S De Smithske (DESMI) Grundfos

Sta-Rite Industries

Flowserve

Completed its acquisition of Invensys plcs Flow Control Division (IFC) (see Pump Industry Analyst, June 2002). Merged with The Nash Engineering Co (see Pump Industry Analyst, June 2002).

Elmo Vacuum Technology Hitachi Industrial Equipment Systems

Consolidated the Industrial Components and Equipment Group of Power generation pumps are now manufactured by Hitachi Industries Hitachi Ltd (including general purpose pumps), Hitachi Drive Co Ltd. Systems Ltd, Hitachi Nakajo Technology Ltd, Hitachi Service & Engineering (East) Ltd and Hitachi Service & Engineering (West) Ltd. Purchased Chart Industries CVI pump division, (see Pump Industry Analyst, June 2002). Won control of Johnson Pump (see Pump Industry Analyst, June 2002). Purchased Seiko Instruments turbomolecular pump business for approximately 70 million (see Pump Industry Analyst, May 2002). The deal expanded the French companys presence in the US pump market. As a result, TMT Ones investment portfolio was liquidated and the company has since changed its name to Johnson Pump AB. The deal also includes Seiko Instruments 87.5% stake in Societe de Mecanique Magnetique, the French controller company.

Cryostar TMT One The BOC Group Derlan Industries

Directors approved a formal plan to dispose of its joint venture pump Once the pump businesses have been divested, the companys operations (see Pump Industry Analyst, May 2002). remaining operations will be solely focused on aerospace. First quarter 2002

Grundfos

Strengthened its position in the Asian market by taking a 60% holding in the South Korean pump manufacturing company Chung Suk Co Ltd (see Pump Industry Analyst, April 2002). Purchased KSBs Chteauroux factory in France and the rights to the brand name Pompes Guinard for the building and DIY sectors. Extended its European activities by acquiring Soprime, a French manufacturer of pumping stations, and set up a Portuguese subsidiary (see Pump Industry Analyst, March 2002). Underwent a management buy-out, returning 80% of the Scottish company to private ownership with BI Marine & Offshore Ltd retaining a minority shareholding (see Pump Industry Analyst, March 2002). Acquired American Machine and Tool Co (AMT), a manufacturer of off-the-shelf industrial centrifugal pumps based in Royersford, Pennsylvania (see Pump Industry Analyst, March 2002). Bought the Finnish company Nopon Oy, a manufacturer of aeration systems for biological wastewater treatment (see Pump Industry Analyst, February 2002). Acquired Southern States Industries (SSI), a Memphis, Tennesseebased distributor of pumps and pumping systems for the municipal and industrial markets in Arkansas, West Tennessee and North Mississippi (see Pump Industry Analyst, February 2002).

Grundfos will acquire the remaining 40% of the company over the next two years. Chung Suk has an annual production of 500 000 circulator pumps. Annual turnover is approximately US$10 million. Spains Espa continues its expansion. The Soprime aquisition is part of ABSs intensified focus on service and aftersales. Soprime has extensive pump service and rental operations in France. BI Marine & Offshore acquired Dawson Downie Lamont, based in Clydebank, Scotland in 1990.

Espa Group (Bombas Elctricas) ABS

The Forth Tool & Valve division of BI Marine & Offshore Gorman-Rupp

AMT has sold pumps under its own name and under distributor brands for more than 70 years. The product range includes electric and engine driven centrifugal and diaphragm pumps in cast iron, bronze, stainless steel and aluminium, as well as hand and barrel pumps. Nopon has a turnover of SKr120 million and employs 65 people.

Cardo Pump

Tencarva Machinery

Tencarva president Rod Lee said the acquisition would become the nucleus for his companys first venture specifically into the sale of pumps and liquid processing equipment to the municipal market.

11

FEATURE