425: Chart Industries and Flowserve Announce All-Stock Merger of Equals to Create Industrial Process Technology Leader

Chart Industries and Flowserve Corporation have announced an all-stock merger of equals, aiming to establish a differentiated leader in industrial process technologies with complementary capabilities and a global customer network.

Summary

• Chart Industries and Flowserve Corporation will combine in an all-stock merger of equals.
• The combined entity aims to become a differentiated leader in industrial process technologies.
• Flowserve is a leading provider of flow control products and services for global infrastructure markets.
• The merger will bring together complementary capabilities and cultures, offering a complete system of flow and thermal management solutions.
• The combined company will offer over 5.5 million products in more than 50 countries.
• The transaction is expected to close in the fourth quarter of 2025, subject to various approvals.
• Day-to-day operations for both companies will remain independent until the transaction closes.
• A dedicated team will work on integration plans for bringing the companies together.
• Jill Evanko, current Chart CEO, will serve as Chair of the Board of the combined company.
• Scott Rowe, current Flowserve CEO, will serve as Chief Executive Officer of the combined company.
• The combined company's Board will have equal representation from both Chart and Flowserve.

Sentiment

Score: 8

Explanation: The document conveys a highly optimistic and positive sentiment regarding the strategic merger, emphasizing complementary strengths, growth opportunities, and future leadership in the industry. While it acknowledges standard merger risks, the overall tone is one of strong confidence and excitement for the combined entity's prospects.

Positives

• The merger creates a differentiated leader in industrial process technologies.
• It combines two strong businesses with complementary capabilities and cultures.
• The combined company will provide a complete system of capabilities through the full customer lifecycle for flow and thermal management.
• It will offer more than 5.5 million products in over 50 countries, serving a broader, international customer network.
• The merger is expected to improve delivery of high-quality, value-added solutions and provide greater opportunities and efficiencies for customers.
• The combination is anticipated to lead to greater growth opportunities for employees across the world.
• The combined company will have an exceptional team of talented employees critical to future success.

Risks

• Regulatory approvals may not be obtained, or may be subject to unanticipated conditions, limitations, or restrictions.
• Failure to receive required transaction-related approvals from Chart's stockholders and Flowserve's shareholders on a timely basis or otherwise.
• Potential delays in consummating the proposed merger transaction, including due to failure to receive regulatory approvals.
• Inability to integrate the operations of Chart and Flowserve successfully or within the expected time period.
• Anticipated benefits and projected synergies of the merger may not be realized or not within the expected time period.
• Possibility of competing offers or acquisition proposals being made.
• Occurrence of any event, change, or circumstance that could lead to the termination of the merger agreement, potentially requiring a termination fee.
• Risks that the anticipated tax treatment of the proposed merger transaction is not obtained.
• Unforeseen or unknown liabilities may arise.
• Customer, stockholder, regulatory, and other stakeholder approvals and support may not be secured.
• Unexpected future capital expenditures may be required.
• The combined company's ability to pay a quarterly dividend as expected may be impacted.
• Potential litigation relating to the proposed merger transaction against Chart, Flowserve, or their respective directors.
• The transaction may be more expensive to complete than anticipated due to unexpected factors or events.
• The announcement, pendency, or completion of the merger may negatively affect business relationships and general business operations.
• The proposed merger transaction may disrupt current plans and operations of Chart or Flowserve.
• Potential difficulties in employee retention as a result of the proposed merger transaction.
• Risk of disruption of management and ongoing business operations during the pendency of, or following, the proposed merger transaction.
• Uncertainties regarding whether the merger will be consummated on anticipated timing or at all, or if consummated, will achieve anticipated economic benefits.
• Risks associated with third-party contracts containing material consent, anti-assignment, transfer, or other provisions related to the merger that are not waived or resolved.
• Changes in commodity prices.
• Negative effects of the announcement and pendency/completion of the merger on the market price of Chart's or Flowserve's common stock and/or operating results.
• Rating agency actions and the ability to access shortand long-term debt markets on a timely and affordable basis.
• Various events that could disrupt operations, including severe weather, cybersecurity attacks, security threats, and governmental response.
• Labor disputes, changes in labor costs, and labor difficulties.
• Effects of industry, market, economic, political, or regulatory conditions outside of Chart's or Flowserve's control.
• Legislative, regulatory, and economic developments targeting public companies in the industrial sector.
• Global supply chain disruptions and the current inflationary environment.
• Substantial dependence of Chart's and Flowserve's sales on the success of the energy, chemical, power generation, and general industries.
• Economic, political, and other risks associated with the international operations of Chart and Flowserve.
• Potential adverse effects from the implementation of tariffs and related retaliatory actions, and changes to or uncertainties related to tariffs and trade agreements.

Future Outlook

The combined company is expected to be a differentiated leader in industrial process technologies, offering a complete system of capabilities for flow and thermal management. It anticipates serving a broader international customer network, improving delivery of high-quality solutions, and providing greater opportunities and efficiencies. The merger is projected to lead to greater growth opportunities for customers and teams globally, leveraging an exceptional team of talented employees for future success.

Management Comments

• Jill Evanko, CEO and President of Chart Industries, stated, "Today, I am pleased to share exciting news about our company and our future. This morning, we announced that Chart and Flowserve will combine in an all-stock merger of equals to create a differentiated leader in industrial process technologies."
• Jill Evanko also commented, "At the core of Charts success is our people, and we are confident this merger will lead to greater growth opportunities for our customers and for our teams across the world."
• Jill Evanko added, "Ultimately, the combined company will have an exceptional team of talented employees who will be critical to our future success."
• Jill Evanko expressed, "On behalf of our Board and leadership team, I am incredibly optimistic about our future with Flowserve and this exciting new chapter."

Industry Context

This merger brings together two significant players in the industrial sector: Chart Industries, known for thermal management and cryogenic solutions, and Flowserve, a leader in flow control products. The combination aims to create a more comprehensive offering in industrial process technologies, addressing the full customer lifecycle from engineering to aftermarket services. This move reflects a trend towards consolidation in mature industrial markets to achieve scale, broaden product portfolios, and enhance global reach, particularly in critical infrastructure and energy transition sectors.

Management Changes

Corporate Governance

Legal Proceedings

• Potential litigation relating to the proposed merger transaction that could be instituted against Chart, Flowserve or their respective directors.

Stakeholder Impact

• **Shareholders:** Will receive shares of Flowserve common stock and preferred stock as part of the all-stock merger, subject to approval. The merger aims to create a more valuable combined entity.
• **Employees:** Day-to-day operations remain unchanged until closing. The merger is expected to lead to greater growth opportunities for teams across the world. A dedicated team will work on integration plans, and town hall meetings are scheduled to address employee questions.
• **Customers:** The combined company will offer a complete system of capabilities, a broader international network, and improved delivery of high-quality, value-added solutions, providing greater opportunities and efficiencies.
• **Suppliers:** Potential for changes in supply chain dynamics as the companies integrate operations, though not explicitly detailed.
• **Creditors:** The document mentions the combined company's ability to pay a quarterly dividend as expected, implying financial stability considerations, but no direct impact on creditors is detailed.

Next Steps

• Chart and Flowserve will remain independent companies until the transaction closes.
• A dedicated team will work closely with Flowserve on developing integration plans.
• Chart employees will receive an invite for a Global CEO town hall meeting today at 12:30 PM CT.
• An additional town hall meeting will be held tomorrow at 9:00 AM CT to accommodate time zones.
• Relevant materials, including a registration statement on Form S-4 and a joint proxy statement/prospectus, will be filed with the SEC.
• The registration statement will be declared effective, and the joint proxy statement/prospectus will be mailed to Chart and Flowserve stockholders for approval.
• Investors and security holders are urged to read the joint proxy statement/prospectus and other relevant documents when they become available.
• Changes in beneficial ownership of securities by directors or executive officers will be reflected on Forms 3, 4, or 5 filed with the SEC.

Key Dates

Recommendation

Keywords

Merger, Acquisition, Industrial Process Technologies, Flow Control, Thermal Management, Chart Industries, Flowserve, All-stock merger, SEC Filing, Corporate Governance, Strategic Partnership, Manufacturing, Energy Sector, Chemical Industry, Power Generation