With approval from France unlikely, the sale of Montreal industrial valve manufacturer Waylon to an American company fell through.
Whalen announced in February that it had accepted a $13 per share offer from Flowserve, a Texas company.
Flowserve’s proposed acquisition of Whalen has taken a political turn because of Whalen’s operations in France. Whelan operates two subsidiaries in France (Segault and Whelan SAS) and was verbally informed on Thursday that the French Finance Minister’s office was rejecting the sale of both subsidiaries to Flowserve. Whelan and Flowserve did not give reasons Thursday for the French government’s decision.
In France, Velan manufactures valves mainly for the nuclear sector.
Opposition from the French government forced Flowserve to abandon its acquisition project.
While Whelan and the Quebec Superior Court approved the transaction in May, Flowserve’s big boss said in early August that the approval process in France was more difficult. He said this is a matter of national security and Flowserve is working with the Department of Defense and the Department of Energy.
Whelan clarified on Thursday that the French authorities oppose the transaction despite the corrective measures and commitments proposed by Flowserve. Already postponed twice, the deadline to close the transaction was recently set for October 7 as it still needs approval from the French government.
“While we are disappointed with the outcome of the proceedings and the decision of the French authorities, we remain confident in the future of Whalen,” James Mannebach, chairman of Whalen’s board of directors, commented in a press release.
“Extremely” surprising decision
While Whelan will continue to pursue its path independently, James Mannebach assured that Whelan will continue to study all strategic options that create value for all of its shareholders.
Stephen Takacsi, a portfolio manager at Montreal firm Gestion Lester, was “very surprised” by France’s decision. “It is unbelievable that the French government would jeopardize such a transaction. Segault Whalen’s smaller subsidiary and Flowserv are also ready to compromise,” he said. “The solution now is to sell the French subsidiary separately to the French group and the rest of the company to another company. The family wants to sell, so Whalen continues to explore all options. »
Investors will react to the news this Friday as Whelan stock closed Thursday’s session at $11.01 on the Toronto Stock Exchange.
Controlled by the family of founder, the late Karel Whalen, Whalen’s company is worth about $240 million at current stock prices.