Alfa bet soup

13 July 2020 By George Hay Follow @gfhay

The Swedish industrial group’s cash offer for valve maker Neles raises its exposure to carbon-heavy markets. In the absence of as-yet-unquantified synergies, the return on investment looks paltry at less than 4%. Alfa investors who hailed the purchase are taking a lot on trust.

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Swedish industrial group Alfa Laval on July 13 announced a recommended 1.73 billion euro ($1.96 billion) cash bid for Finnish valves maker Neles, seeking to boost its presence in the industrial flow control market.

The offer of 11.50 euros per Neles share represents a premium of around 32.8% to Neles' closing price on July 10, the companies said.

Neles, whose valves are used in industries ranging from oil and gas to pulp and paper, became an independent company earlier in July when its parent Metso's 2019 deal to merge its bigger minerals technology unit with Outotec was completed.

Neles shares were trading at 11.8 euros as of 0818 GMT on July 13, up 36%. Shares in Alfa Laval were 4.9% higher at 485 Swedish crowns.

Activist investor Cevian Capital, which has a 10.9% stake in Neles, has agreed to accept the offer.

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The offer of 11.50 euros per Neles share represents a premium of around 32.8% to Neles' closing price on July 10, the companies said.

Neles shares were trading at 11.8 euros as of 0818 GMT on July 13, up 36%. Shares in Alfa Laval were 4.9% higher at 485 Swedish crowns.

Activist investor Cevian Capital, which has a 10.9% stake in Neles, has agreed to accept the offer.

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