Pump Engineering takeover gives ERI turbine technology
Energy Recovery Inc, manufacturer of PX energy-recovery devices for the desalination industry, announced on 2 December 2009 that it has entered into a definitive agreement to acquire all of the equity interests of competitor Pump Engineering LLC, based in New Boston, Michigan.Under the terms of the agreement, ERI will pay the shareholders of Pump Engineering approximately US$ 20 million in cash plus one million shares of ERI common stock. The completion of the transaction, which is subject to satisfaction of customary conditions, is expected to take place in the fourth quarter of 2009.
Pump Engineering is a leading provider of centrifugal turbine energy-saving technology for seawater and brackish-water desalination applications, and has demonstrated support for emerging markets such as natural gas and high pressure fluid processing. The company's turbine technology can be applied to new and substantially larger markets outside of the water-treatment markets such as natural gas and other high-pressure fluid processes.
"ERI's acquisition of Pump Engineering is aligned with our growth strategy of expanding our product offerings and addressing potential new markets. It allows ERI to offer our clients multiple complementary technologies that are unmatched in the industry," said ERI president and CEO GG Pique.
"This acquisition underscores ERI's commitment to lead a global effort to prove that desalination is an affordable, environmentally sound and energy-efficient answer to the growing water crisis," Pique continued. "Pump Engineering is the leading, high-quality energy-recovery device solution in areas where the cost of power is low and the customer is more sensitive to the up-front capital cost.
"With dedicated sales and marketing, technical and support teams, the combined client base will benefit from a total solution package with enhanced customer service capabilities and a wider breadth of technical expertise in R&D. We can now supply any desalination project in the world with the most appropriate energy recovery device."
"We're delighted with ERI's validation of Pump Engineering's technology and overall market strategy," stated Robert Oklejas, founder and president of Pump Engineering. "For the past 23 years, our employees have been dedicated to designing a very high-quality technology that offers a cost-conscious energy saving desalination solution. Our customers around the world will benefit from the superior array of energy recovery solutions that our combined efforts and products will bring to the market."
Pump Engineering is currently organized as a limited liability company. Its unaudited financial statements for its fiscal year ended 31 December 2008 show that the company generated $9.3 million in revenue and produced an operating margin of 10%.
Pump Engineering expects to generate approximately $8 to $9 million of revenue in 2009 and approximately $13 to $15 million in revenue in 2010, including the Magtaa project in Algeria which it won recently. The estimated revenues for 2010 do not include the potential for synergistic sales of high-pressure and circulation pumps to ERI's OEM customers or sales into new applications outside of desalination.