Alfa Laval to buy valve maker Neles for €1.73bn

Sweden’s Alfa Laval has agreed to buy Finnish valve maker Neles for €1.73bn in cash.

Under the terms of the deal, Alfa Laval will pay €11.50 per share for Neles, which is a premium of about 32.8% to the closing share price on Friday.

Alfa Laval said it has identified the industrial flow control market as a key growth area and that the transaction enables the group "to considerably strengthen" its presence in the large industrial flow control space, where it currently offers mainly energy efficiency solutions.

President and chief executive officer Tom Erixon said: "The proposed deal offers a strong industrial logic: Our businesses complement each other well with very little overlapping operations.

"Alfa Laval has the resources to invest in and support the development of Neles for years to come while our global service network offers Neles a ‘plug and play’ kind of platform. As an owner, Alfa Laval would be committed to the strategy and industrial plan of Neles while offering a powerful platform to enable future growth. The match is nearly perfect."

Alfa said members of the board of directors of Neles who participated in the decision-making process have unanimously decided to recommend that shareholders accept the tender offer.

Swedish investment firm Cevian Capital, which has a 10.9% stake in Neles, has also agreed to accept the offer.