Flowserve (NYSE: FLS) exits legacy asbestos liabilities with $219M BWIP divestiture

Rhea-AI Filing Summary

Flowserve Corporation has completed the divestiture of all its legacy asbestos liabilities by selling its wholly owned subsidiary BW/IP – New Mexico, Inc. to Ajax HoldCo LLC, an affiliate of Acorn Investment Partners and a portfolio company of Oaktree Capital Management. At closing, BWIP was capitalized with related assets and approximately $219,000,000 in cash, including a $199,000,000 contribution from Flowserve and a $20,000,000 contribution from the buyer.

After this transaction, the asbestos-related liabilities and associated insurance assets will be removed from Flowserve’s consolidated balance sheet, while the buyer assumes management of BWIP, including claims and insurance reimbursements. The boards of the selling entities received an independent solvency opinion supporting their determination that BWIP was solvent and adequately capitalized after the divestiture.

Positive

• Flowserve removes all legacy asbestos liabilities from its consolidated balance sheet by divesting BW/IP – New Mexico, Inc., potentially reducing long-term legal and balance sheet risk.

Negative

• None.

Insights

Equity and credit risk analyst

Flowserve pays $199M to fully ring-fence and transfer legacy asbestos liabilities off its balance sheet.

Flowserve Corporation has closed the sale of BW/IP – New Mexico, Inc., the subsidiary holding all legacy asbestos liabilities and related insurance assets, to Ajax HoldCo LLC. BWIP was capitalized with related assets and approximately $219,000,000 in cash, including $199,000,000 contributed by Flowserve and $20,000,000 from the buyer. The transaction follows a purchase agreement dated October 28, 2025.

As a result, the divested asbestos liabilities and associated insurance assets will be removed from Flowserve’s consolidated balance sheet, while the buyer assumes management of BWIP, including claims handling and insurance policy reimbursements. Each seller’s board obtained a solvency opinion from an independent advisory firm, supporting its conclusion that BWIP was solvent and adequately capitalized after the divestiture, which is important for the structural soundness of the transfer.

The transaction reduces legacy liability exposure but involves a significant cash contribution from Flowserve. Future financial disclosures for periods after December 11, 2025 will reflect the absence of these asbestos liabilities and related insurance assets, which may change the company’s risk profile and balance sheet composition.

FLOWSERVE CORP false 0000030625 0000030625 2025-12-11 2025-12-11

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): December 11, 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 7.01 Regulation FD Disclosure.

Flowserve Completes Divestiture of Legacy Asbestos Liabilities

On December 11, 2025, Flowserve Corporation, a New York corporation (the “Company”), completed its previously announced divestiture of all its legacy asbestos liabilities by selling BW/IP – New Mexico, Inc. (“BWIP”), a Delaware corporation and wholly owned subsidiary of the Company that holds these liabilities and related insurance assets (the “Divestiture”). The Divestiture was made to Ajax HoldCo LLC (“Buyer”), an affiliate of Acorn Investment Partners, a portfolio company of funds managed by Oaktree Capital Management L.P.

At closing, BWIP was capitalized with the related assets and a total of approximately $219,000,000 in cash, of which the Company contributed $199,000,000 and Buyer contributed $20,000,000. In connection with the Divestiture, the board of directors of each seller under the purchase agreement dated October 28, 2025 received a solvency opinion from an independent advisory firm that formed the basis (along with other inputs) for its determination that BWIP was 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 the Company’s consolidated balance sheet. Buyer has assumed management of BWIP, including the management of its claims and insurance policy reimbursements.

On December 11, 2025, the Company issued a press release announcing the Divestiture, a copy of which is furnished as Exhibit 99.1 hereto.

The information furnished in Item 7.01 of this Form 8-K, including Exhibits 99.1 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 December 11, 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: December 11, 2025				By:		/s/ Amy B. Schwetz
						Amy B. Schwetz
						Senior Vice President, Chief Financial Officer

FAQ

What major transaction did Flowserve (FLS) announce in this 8-K?

Flowserve announced that it completed the divestiture of all its legacy asbestos liabilities by selling its wholly owned subsidiary BW/IP – New Mexico, Inc. to Ajax HoldCo LLC, an affiliate of Acorn Investment Partners and a portfolio company of Oaktree Capital Management.

How much cash was contributed in Flowserve’s (FLS) asbestos liability divestiture?

At closing, BW/IP – New Mexico, Inc. was capitalized with related assets and approximately $219,000,000 in cash, of which Flowserve contributed $199,000,000 and the buyer contributed $20,000,000.

What happens to Flowserve’s asbestos liabilities after this transaction?

As a result of the divestiture, the divested asbestos liabilities and related insurance assets will be removed from Flowserve’s consolidated balance sheet, and the buyer will manage BW/IP, including its claims and insurance policy reimbursements.

Did Flowserve obtain a solvency opinion related to the asbestos divestiture?

Yes. In connection with the divestiture, the board of directors of each seller under the purchase agreement dated October 28, 2025 received a solvency opinion from an independent advisory firm, supporting its determination that BW/IP was solvent and adequately capitalized after the transaction.

Who is the buyer of Flowserve’s BW/IP – New Mexico, Inc. subsidiary?

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

How did Flowserve (FLS) communicate the completion of the asbestos divestiture?

Flowserve issued a press release on December 11, 2025 announcing the completion of the divestiture, which is furnished as Exhibit 99.1 to this report.