Montreal, November 11, 2002 -- GL&V on Friday closed its acquisition of the main assets, namely the proprietary rights, goodwill, working capital and certain fixed assets of EIMCO PROCESS EQUIPMENT COMPANY (EIMCO), a division of BAKER HUGHES INCORPORATED.
Based in Salt Lake City, Utah, EIMCO a supplier of high-performance technologies for liquid and solid separation processes. It serves various industrial sectors such as chemicals and petrochemicals, mining and minerals, and the treatment of drinking water and municipal and industrial wastewater. EIMCO has achieved sales of (Can)$280 million in its last fiscal year.
The cost of the transaction amounts to (Can)$80 million, which corresponds to the net book value of the acquired assets. These consist mainly (in a 77% proportion) of accounts receivable, inventories and work in progress. The acquisition is being financed by a combination of bank indebtedness and GL&V's available cash, including a portion of the proceeds from the $31.9 million private placement concluded last October 18th. "Therefore, our debt/invested capital ratio is only rising slightly," stated Laurent Verreault, President and Chief Executive Officer.
Concurrently to the acquisition, GL&V announces that it has entered into an agreement with two financial institutions to arrange a credit facility totalling $135 million, which will notably serve to refinance the existing debt, finance a portion of EIMCO's acquisition cost, and provide for the Company's future projects.
The acquisition of EIMCO is perfectly in line with GL&V's strategic and financial objectives, one of them being to bring sales over the billion-dollar mark within the next four years:
• While adding a minimum of manufacturing assets, it provides GL&V with the proprietary rights to a wide range of products and technologies recognized around the world.
• An ideal complement to the Process Group (Dorr-Oliver), whose sales will thereby triple, it will help better balance GL&V's sources of revenues between its principal markets: minerals and industrial, pulp and paper, as well as the high potential environment, water and wastewater treatment sectors.
• The acquisition consolidates GL&V's international presence, mostly in emerging markets such as Latin America and the Asia-Pacific region.
• EIMCO has been in business for more than a century and has a large installed base of equipment in operation worldwide, which offers a great potential for aftermarket business, GL&V's most strategic market.
Given the synergies between the organizations and worldwide networks of Dorr-Oliver and EIMCO, GL&V estimates that recurring savings of approximately $30 million could be created as of fiscal 2003-2004.
"We are giving ourselves about six months to carry out most of the integration and achieve the potential synergies," indicated Laurent Verreault. "In the short term, this rationalization will entail non-recurring costs of $10 million to $15 million, most of which will be capitalized in the acquisition price. In the ensuing months, we will build other synergies, especially at the supply and distribution level. Given our track record in efficiently integrating acquired businesses, we are confident this acquisition will rapidly yield significant value for our shareholders," concluded the President.
