BW/IP to merge with Durco International in deal valued at 18.5 times earnings

Weekly Corporate Growth Report, May 26, 1997

The Deal: Durco International has agreed to merge with BW/IP in a stock swap valued at $435.6 million, plus the assumption of $80 million in debt BW/IP shareholders will receive 0.6968 share of Durco stock for each of their shares. the exchange values BW/ IP at $18.55/share. Durco International adopted the Durco name in April 1997. It was previously known as Durion Co.

Discussion: The transaction will allow Durco to advance beyond its reliance on the chemical industry by adding BW/IP's strength in the petroleum market, which makes up about two-thirds of its revenue. The combined companies will have annual revenue of over $1.1 billion and earnings of over $71 million. The combination s larger size will also help it reach more markets with more products. The industrial pump business is highly competitive and cost savings are usually passed on to customers as lower prices, rather that adding them to the bottom line. The companies expect to save $35 million to $45 million in costs between now and the year 2000. The new company will also benefit from being significantly less cyclical and having a better balanced customer mix.

Bernard G. Rethmore, BW/ IP's chairman, president and CEO, believes that the merger "provides critical mass and creates a company that is better able to service our customers By merging the two companies, we are creating the most cost-effective organization possible and adding value for shareholders of both companies."