Sulzer takes over Ahlstrom pump activities

30.04.2000

Sulzer has acquired the pump activities of the A. Ahlstrom Corporation, Helsinki. Final closing is expected in mid May, subject to approval of the regulatory and antitrust authorities. This strategic acquisition gives Sulzer a leading position in pumps for the pulp and paper industry. Sulzer Pumps sales will rise thereby from EUR 445 million (CHF 710 million) to EUR 580 million (CHF 930 million). Personnel will increase by 1000 to about 5000 employees in total. The purchase price is approximately EUR 145 million (CHF 230 million).

Acquisitions and mergers are currently redesigning the landscape of the pump industry. Sulzer Pumps is strongly positioned in the oil, gas and petrochemical sectors, in power generation and water transport with ten production plants worldwide and a service network with a wide global coverage. The strong position of Ahlstrom Pumps in the pulp and paper industry significantly broadens this basis, and also compensates for cyclic fluctuations in the individual market segments. Furthermore, Sulzer Pumps will benefit substantially from the outstanding know-how of Ahlstrom Pumps in production and process technology.

In recent years, Ahlstrom Pumps consistently achieved good results with EBIT margins reaching partially more than 10%. Despite a negative cyclical impact in 1999, operating income was EUR 13 million (CHF 21 million). There will be no dilution effect on operating income after goodwill amortization. Immediately after integration and synergy exploitation, Ahlstrom Pumps will contribute to a substantial earnings growth.

Thomas Gutzwiller, head of Sulzer Pumps, sums up the benefits of this acquisition as follows: "Sulzer Pumps and Ahlstrom Pumps are ideally complementary in products and markets, yet still yielding synergies in operations and after sales service. With this acquisition we can concentrate again on growth in more standardized pumps business, thus strengthening our position in the globally consolidating market.” Management, co-workers and all company sites will be taken over by Sulzer. In future the name Ahlstrom Pumps will change to Sulzer Pumps.

The plans announced at the recent Annual Press Conference for expanding pump sales to CHF 1 billion or more within two to three years are thus taking rapid effect. Fred Kindle, CEO Sulzer Industries, commented: "This large acquisition underlines our expansion plans for Sulzer Industries after realignment and restructuring. Further steps will follow for strategic growth of the four divisions Sulzer Pumps, Sulzer Turbomachinery Services, Sulzer Metco and Sulzer Infra.”

Ahlstrom Pumps is one of the leading companies in process pumps for the pulp and paper industry, with a high global market share. In recent years, Ahlstrom Pumps diversified into the food, metal mining and fertilizer industries. Two thirds of sales totaling EUR 134 million (CHF 215 million) are in pump replacements and spare parts, service and refurbishing, thus ideally complying with Sulzer Pumps strategic expansion plans both in OEM and service business. The company has three modern production plants in Finland and one in the USA, with some 1060 co-workers worldwide.

The Ahlstrom Group is divesting the pump business within the framework of strategic realignment. The Group is focusing on specialty papers and advanced fiber web materials, and will also retain a strategic position in flexible packaging. "By transferring our successful pump business to Sulzer as preferred owner, favorable conditions are assured for further growth of this non-core activity”, says Juha Rantanen, President and CEO of A. Ahlstrom Corporation.

Further information on Ahlstrom Pumps you will find on the Ahlstrom Pumps Website.

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