Milwaukee-based Rexnord Corp. has reached a deal to sell its VAG business for $25 million in cash to Aurelius Equity Opportunities SE & Co. KGaA of Germany, according to securities filings.
The deal also includes the potential for Rexnord to receive up to an additional $20 million based on earnings through March 31, 2021.
The deal is expected to close by the end of the year.
Rexnord announced earlier this year it planned to divest the VAG business, which manufactures water and wastewater valves. The company acquired VAG in 2011 for $238 million.
Todd Adams, Rexnord president and chief executive officer, said in May that VAG “just doesn’t match with the other parts of Rexnord.”
Based in Germany, VAG has roughly 1,200 employees and production facilities in Germany, the Czech Republic, China, India, South Africa and the United States.
“VAG is an exciting company with great potential, which we want to realize by completing the restructuring,” said Gert Purkert, a member of the Aurelius executive board.
Aurelius plans to continue an ongoing restructuring program by consolidating production facilities while also making investments in VAG’s largest facility in the Czech Republic.
Rexnord plans to record $75 million to $85 million in non-cash impairment charges related to the transaction during the second quarter of fiscal 2019. The company already recorded an impairment charge of $111.2 million when it announced the planned divestiture of the business.
With the sale of VAG, Rexnord plans to focus its water management efforts on its Milwaukee-based subsidiary Zurn, which makes specification grade commercial plumbing products.
