Pentair is considering selling its valves and controls unit, a business that it purchased only four years ago, according to a report in the Wall Street Journal. The deal could bring in more than $2 billion.
Manchester, England-based Pentair acquired the valves and control business from Tyco International for $4.5 billion in 2012. The deal included other business segments as well but the valves and controls unit represented the majority of sales, the WSJ said.
Pentair recently reported a 10 percent decrease in Q1 sales for the business segment, partially due to a drop off in the energy markets. Company executives have predicted an 8 percent drop in full-year revenue for the unit.
The business, one of four subdivisions of Pentair, makes valves, fittings and controls for machinery used by oil-and-gas, power and pharmaceutical companies, the WSJ reported. The company recently hired Dennis Cassidy to be the new leader of the unit.
Pentair has been hit by a slowdown in spending by energy-industry customers as a result of the sharp drop off in oil prices. On the company’s quarterly earnings conference call in April, Pentair Chief Executive Randall Hogan said the other three other units were positioned well, but the valves-and-control business won’t grow until at least 2017.
“We've believed for some time that the downturn in energy is more than cyclical and we've acted accordingly,” Hogan said in the call. “Over the past 12 months, we've realigned the business to reflect the energy industry decline resulting in head count reductions of over 20 percent. It hasn't been easy but it was necessary."
Last August, Pentair purchased Erico Global Co., an Ohio-based maker of electrical and fastening products, for $1.8 billion. Erico, originally formed to supply welding equipment to railway and mining companies, makes and sells electrical and fastening products for electrical, mechanical and civil applications. Their products are used in electrical and mechanical devices, including telecommunications, fire protection, and heating and air-conditioning equipment.
The addition of Erico helped Pentair’s technical solutions group report first-quarter sales of $525 million, up 33 percent from the first quarter last year, Hogan said.
“The integration of Erico is on track and we remain committed to delivering full-year synergies of greater than $10 million,” he added.