KMG Chemicals acquires US valve lubricants, sealants group Val-Tex

Global specialty chemicals group KMG Chemicals has acquired privately-held Valves Incorporated of Texas (Val-Tex), a manufacturer of industrial valve lubricants and sealants since 1962, in a merger transaction. 

In addition to the lubricants business, KMG will acquire the 606,875 shares of KMG common stock owned by Val-Tex. The closing of the transaction is anticipated to occur in late April upon the satisfaction of certain customary conditions.

Located in Houston, Val-Tex is a preferred provider of cost-effective valve lubricants primarily to the oil and gas storage, pipeline and gas distribution markets. Val-Tex manufactures and distributes industrial sealants and lubricants, as well as related products, such as lubrication equipment and fittings. 

Val-Tex serves the global valve maintenance market, estimated at more than $200 million in annual sales, with value-added specialty products that enable optimal valve operation and help prevent costly, unscheduled downtime at customer facilities and pipelines. 

In addition, Val-Tex’s products provide safety benefits along with preventing fugitive valve emissions. For the trailing 12-month period ended February 28, 2015, Val-Tex generated $12.0 million in sales and reported EBITDA of $3.4 million.

“We are very pleased to welcome Val-Tex and its dedicated employees to KMG," said Chris Fraser, KMG’s chairman and CEO. "With this strategic acquisition, KMG enters the large and fragmented global market for industrial lubricants. 

"Val-Tex has an outstanding reputation in valve lubricants, serving several leading energy and energy service providers, and has demonstrated a track record of consistent growth and cash flow generation," he continued. "When the transaction closes, Val-Tex will be immediately accretive to KMG’s adjusted EBITDA and adjusted diluted earnings per share.

“Our initial focus will be on seamlessly integrating Val-Tex into KMG and supporting their pursuit of growth opportunities in the North American market. We also see exciting potential to expand Val-Tex’s participation in international markets by leveraging KMG’s global infrastructure and distribution capabilities, particularly in Europe and Asia."

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