Flowserve Corporation completed the divestiture of its wholly‑owned subsidiary BW/IP – New Mexico, Inc. on December 11, 2025, a transaction that was announced on December 12, 2025. The company transferred the asbestos‑related liabilities and related insurance assets to a new entity owned by an affiliate of Acorn Investment Partners, contributing $199 million in cash and the insurance assets to the buyer. The total capitalization of the new entity was approximately $219 million, of which Acorn contributed $20 million.
The divestiture generated a one‑time loss of about $140 million for Flowserve, a charge that will be excluded from adjusted earnings per share. The $199 million cash outlay and the transfer of insurance assets removed the contingent liability from Flowserve’s balance sheet, eliminating future exposure to asbestos claims and providing a clean slate for future financial reporting.
Strategically, the transaction aligns with Flowserve’s focus on the Flowserve Business System and its 80/20 initiatives. By shedding a legacy risk that has persisted for decades, the company improves its net debt‑to‑EBITDA ratio and frees capital that can be deployed toward growth initiatives and shareholder returns. The move also signals to investors that Flowserve is actively managing long‑term risk and sharpening its core business.
Management emphasized the broader context of the divestiture. President and CEO Scott Rowe said the company “remains focused on leveraging the Flowserve Business System and our 80/20 initiatives to accelerate margin expansion, deliver outsized growth, and execute with excellence.” He added that the divestiture is part of a broader strategy to strengthen the company’s financial position after three consecutive quarters of strong execution and a raised full‑year earnings outlook.
In the broader market context, Flowserve’s Q3 2025 results included an adjusted EPS of $0.90 versus a consensus estimate of $0.80, a beat of $0.10 or 12.5 %. Revenue of $1.17 billion met expectations, and the company reported a 370‑basis‑point expansion in adjusted operating margin. Analysts upgraded price targets and raised guidance, citing the margin expansion and the strategic clarity brought by the asbestos liability divestiture. Some analysts, however, noted that pricing pressure in core markets such as oil & gas and chemicals could temper future growth.
Overall, the divestiture removes a long‑standing contingent liability, improves Flowserve’s leverage profile, and demonstrates the company’s commitment to disciplined risk management while maintaining momentum in its core growth areas. The $140 million loss is a one‑time charge that will not recur, and the freed capital positions Flowserve to pursue new opportunities and return value to shareholders.
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