Analysis: Chart–Flowserve deal and its tech

Global gas equipment company Chart Industries and US-based industrial machinery supplier Flowserve announced today that they have agreed to merge in an all-stock deal worth $19bn. As part of the merger, Chart revealed that the pair would be combining a selection of their ‘smart’ technologies – but what could this mean in practice?

“On the digital side, we’ve got a product called RedRaven, which essentially allows us to instrument, monitor and predict unplanned downtime, and then just really support our customers with the ability to operate and drive profitable operations in their flow loops,” said Scott Rowe, CEO of Flowserve, on the call about the deal.

The merger, among other things, opens the door to Chart’s digital technologies, including Uptime, which is a cloud-based subscription service that provides a 24/7 real-time view of a company’s equipment and its operational performance.

Another tool that was referenced as part of the agreement is Chart’s Ventsim, which is a software suite that is designed for the design, simulation, and control of ventilation systems in subsurface mines and tunnels.

This fits with some of the tech offered by Flowserve-owned company Mogas, which develops special protective valve coatings for applications in the metals and mining industries.

 “With the Chart offering, we’ve expanded that with Uptime and Ventsim. Those teams are also excited to talk about how that technology comes together,” Rowe added.

According to Rowe, this combined ‘digital layer’ spans a reported 5.5 million installed assets globally. He said the integration opens up “substantially more opportunities, both in recurring revenue on a subscription for monitoring, but also on the back of visibility for parts pull-through and product replacement.”

The merger’s integration plans include a dedicated digital workstream called Integration Office that is aimed at aligning the two companies’ technologies and expanding their application across the combined customer base.

“We feel that that’s going to really enhance our ability to better understand our customer challenges, but also best support their efforts as they’re looking to drive operability in their sites,” said Rowe.

Merging some key systems could allow the combined company to offer full lifecycle digital services, which is especially valuable in aftermarket support. This proposition is expected to account for 42% of total revenue post-merger.

More than 200 global service centres and the installed base will serve as digital touchpoints, enabling not just real-time monitoring but also parts forecasting, maintenance planning, and equipment replacement.

By blending their respective technologies, Chart and Flowserve could be positioning themselves to offer customers a single, integrated solution for asset management, spanning from process design and installation to performance analytics and predictive maintenance.

Whether this plays out as a major recurring revenue stream or simply enhances aftermarket pull-through remains to be seen. But with digital capabilities now embedded in the merger’s top-line growth and synergy targets, this is likely just the beginning of a much larger smart tech play.

History tells us that tech integration rarely goes entirely smoothly, but interoperability is better these days, with APIs and systems in the cloud, than in years gone by. Over the next six to 12 months we should get a strong feel for the progress the expanded company is making on its planned digital transformation.