Flowserve to divest asbestos liabilities; $219M capitalization

Rhea-AI Filing Summary

Flowserve Corporation announced it will permanently divest its legacy asbestos liabilities by selling BW/IP – New Mexico, Inc. to Ajax HoldCo LLC, an affiliate of Acorn Investment Partners, a portfolio company of funds managed by Oaktree Capital Management L.P. Closing is expected in Q4 2025.

At closing, the subsidiary will be capitalized with approximately $219,000,000 in cash, including a $199,000,000 contribution from Flowserve and $20,000,000 from the buyer. Upon completion, the asbestos liabilities and related insurance assets will be removed from Flowserve’s consolidated balance sheet, with the buyer assuming management of claims and insurance reimbursements. The sellers’ boards received a solvency opinion supporting that the company will be solvent and adequately capitalized after the transaction. Flowserve also furnished its third-quarter 2025 results press release and an investor presentation reference.

Insights

Corporate finance and liability management analyst

Flowserve ring-fences and transfers legacy asbestos risk; cash outlay $199M.

Flowserve plans to divest a subsidiary housing legacy asbestos liabilities to an Oaktree-affiliated buyer. The entity will be capitalized with $219,000,000, of which Flowserve contributes $199,000,000. This structure transfers claims administration and insurance collections to the buyer, while removing both the liabilities and related insurance assets from Flowserve’s consolidated balance sheet after closing.

A board-level solvency opinion supports that the subsidiary will be solvent and adequately capitalized upon consummation. The economic trade-off is an upfront cash outlay versus the elimination of an uncertain liability stream. Actual impact depends on closing in Q4 2025 and the buyer’s management of claims and insurance recoveries.

Key items to watch include final closing, the derecognition of asbestos-related balances, and any disclosure of effects on reported cash balances and future earnings in subsequent filings.

8-K Event Classification

Item 2.02 — Results of Operations and Financial Condition

1 item

Item 2.02 Results of Operations and Financial Condition Financial

Disclosure of earnings results, typically an earnings press release or preliminary financials.

FAQ

What did Flowserve (FLS) announce regarding its legacy asbestos liabilities?

Flowserve will divest the subsidiary holding these liabilities to Ajax HoldCo LLC, removing the liabilities and related insurance assets from its consolidated balance sheet after closing.

How will the divested subsidiary be capitalized at closing?

It will be capitalized with approximately $219,000,000 in cash: $199,000,000 from Flowserve and $20,000,000 from the buyer.

When is the divestiture expected to close?

Closing is expected in Q4 2025.

Who is the buyer of the subsidiary holding the asbestos liabilities?

Ajax HoldCo LLC, an affiliate of Acorn Investment Partners, a portfolio company of funds managed by Oaktree Capital Management L.P.

What governance or fairness support did Flowserve obtain for the transaction?

Each seller’s board received a solvency opinion indicating the company will be solvent and adequately capitalized after the transaction.

Who advised Flowserve on this transaction?

J.P. Morgan Securities LLC served as exclusive financial advisor and Baker McKenzie LLP served as legal counsel.

What additional materials did Flowserve provide about Q3 2025?

Flowserve furnished a press release on Q3 2025 results and posted an investor presentation on its website.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Accepted by SEC EDGAR 10/28/2025 - 04:06 PM Learn about SEC filing dates

FLOWSERVE CORP false 0000030625 0000030625 2025-10-28 2025-10-28

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 28, 2025

FLOWSERVE CORPORATION

(Exact Name of Registrant as Specified in its Charter)

New York		1-13179		31-0267900
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

5215 N. O’Connor Blvd., Suite 700, Irving, Texas		75039
(Address of Principal Executive Offices)		(Zip Code)

(972) 443-6500

(Registrant’s telephone number, including area code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $1.25 Par Value		FLS		New York Stock Exchange

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On October 28, 2025, Flowserve Corporation, a New York corporation (”Parent”), issued a press release announcing financial results for the third quarter ended September 30, 2025. A copy of this press release is attached as Exhibit 99.1 and incorporated herein by reference.

Item 7.01 Regulation FD Disclosure.

Third Quarter 2025 Financial and Operating Results

On October 29, 2025, Parent will make a presentation about its financial and operating results for the third quarter of 2025, as noted in the press release described in Item 2.02 above. Parent has posted the presentation on its website at http://www.flowserve.com under the “Investors” section.

Flowserve Divests Legacy Asbestos Liabilities

On October 28, 2025, Parent and its wholly owned subsidiaries Flowserve International, Inc., a Delaware corporation (“FL International”), Flowserve US Company, a Delaware statutory trust (“FL US Company” and together with Parent and FL International, the “Sellers”) and BW/IP – New Mexico, Inc., a Delaware corporation (the “Company”), entered into a purchase agreement (the “Purchase Agreement”) to permanently divest all of their legacy asbestos liabilities by selling the Company, which holds these liabilities and the related insurance and deferred tax assets (the “Divestiture”). The Divestiture will be made to Ajax HoldCo LLC (“Buyer”), an affiliate of Acorn Investment Partners, a portfolio company of funds managed by Oaktree Capital Management L.P.

Closing of the Divestiture is expected to occur in the fourth quarter of 2025. At closing of the Divestiture, the Company will be capitalized with the related assets and a total of approximately $219,000,000 in cash, of which Parent will contribute $199,000,000 and Buyer will contribute $20,000,000. In connection with the Divestiture, the board of directors of each Seller has received a solvency opinion from an independent advisory firm that will form the basis (along with other inputs) for its determination that the Company is solvent and adequately capitalized as of the date of, and after giving effect to the consummation of, the Divestiture.

As a result of the Divestiture, the divested asbestos liabilities and related insurance assets will be removed from Parent’s consolidated balance sheet. Following the closing of the Divestiture, Buyer will assume management of the Company, including the management of its claims and insurance policy reimbursements.

On October 28, 2025, Parent issued a press release announcing entry into the Purchase Agreement in connection with the Divestiture, a copy of which is furnished as Exhibit 99.2 hereto.

Parent believes the Divestiture will provide greater long-term financial certainty for Parent’s investors and will enable Parent to continue to focus on organic and inorganic investments to advance its capabilities and expand its addressable markets, while ensuring responsible stewardship of the legacy asbestos liabilities.

J.P. Morgan Securities LLC has acted as exclusive financial advisor to Sellers in connection with the Divestiture, and Baker McKenzie LLP has acted as legal counsel.

The information furnished in Items 2.02 and 7.01 of this Form 8-K, including Exhibits 99.1 and 99.2 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that section and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, unless specifically identified therein as being incorporated therein by reference.

Forward-Looking Statements and Cautionary Statements

This Current Report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Words or phrases such as, “may,” “should,” “expects,” “could,” “intends,” “plans,” “anticipates,” “estimates,” “believes,” “forecasts,” “predicts” or other similar expressions are intended to identify forward-looking statements, which include, without limitation, earnings forecasts, statements relating to our business strategy and statements of expectations, beliefs, future plans and strategies and anticipated developments concerning our industry, business, operations and financial performance and condition.

The forward-looking statements included in this Current Report are based on our current expectations, projections, estimates and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is forecast in such forward-looking statements, and include, without limitation, the following: global supply chain disruptions and the current inflationary environment could adversely affect the efficiency of our manufacturing and increase the cost of providing our products to customers; a portion of our bookings may not lead to completed sales, and our ability to convert bookings into revenues at acceptable profit margins; changes in global economic conditions and the potential for unexpected cancellations or delays of customer orders in our reported backlog; our dependence on our customers’ ability to make required capital investment and maintenance expenditures; if we are not able to successfully execute and realize the expected financial benefits from any restructuring and realignment initiatives, our business could be adversely affected; the substantial dependence of our sales on the success of the energy, chemical, power generation and general industries; the adverse impact of volatile raw materials prices on our products and operating margins; economic, political and other risks associated with our international operations, including military actions, trade embargoes, epidemics or pandemics and changes to tariffs or trade agreements that could affect customer markets, particularly North African, Latin American, Asian and Middle Eastern markets and global oil and gas producers, and non-compliance with U.S. export/re-export control, foreign corrupt practice laws, economic sanctions and import laws and regulations; the impact of public health emergencies, such as outbreaks of epidemics, pandemics, and contagious diseases, on our business and operations; increased aging and slower collection of receivables, particularly in Latin America and other emerging markets; potential adverse effects resulting from the implementation of new tariffs and related retaliatory actions and changes to or uncertainties related to tariffs and trade agreements; our exposure to fluctuations in foreign currency exchange rates, including in hyperinflationary countries such as Argentina; potential adverse consequences resulting from litigation to which we are a party, such as litigation involving asbestos-containing material claims; expectations regarding acquisitions and the integration of acquired businesses; the potential adverse impact of an impairment in the carrying value of goodwill or other intangible assets; our dependence upon third-party suppliers whose failure to perform timely could adversely affect our business operations; the highly competitive nature of the markets in which we operate; if we are not able to maintain our competitive position by successfully developing and introducing new products and integrate new technologies, including artificial intelligence and machine learning; environmental compliance costs and liabilities; potential work stoppages and other labor matters; access to public and private sources of debt financing; our inability to protect our intellectual property in the United States, as well as in foreign countries; obligations under our defined benefit pension plans; our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud; the recording of increased deferred tax asset valuation allowances in the future or the impact of tax law changes on such

deferred tax assets could affect our operating results; our information technology infrastructure could be subject to service interruptions, data corruption, cyber-based attacks or network security breaches, which could disrupt our business operations and result in the loss of critical and confidential information; ineffective internal controls could impact the accuracy and timely reporting of our business and financial results; and other factors described from time to time in our filings with the Securities and Exchange Commission.

All forward-looking statements included in this Current Report are based on information available to us on the date hereof, and we assume no obligation to update any forward-looking statement.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.		Description
99.1		Press Release, dated October 28, 2025.
99.2		Press Release, dated October 28, 2025.
104		Cover Page Interactive Data File (embedded within the Inline XBRL Document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

				FLOWSERVE CORPORATION
Dated: October 28, 2025				By:		/s/ Amy B. Schwetz
						Amy B. Schwetz
						Senior Vice President, Chief Financial Officer