Paradice Investment Management Opens New $18 Million Position in Flowserve (NYSE: FLS)

Paradice Investment Management LLC initiated a new $17.97 million position in Flowserve Corporation (NYSE:FLS) during Q3 2025, acquiring 338,154 shares which constitute 4.03% of its reportable assets. This significant investment, making FLS Paradice's 12th largest holding, is seen as a strategic play on Flowserve's impending 'merger of equals' with Chart Industries. The merger is anticipated to generate $300 million in annual cost savings and create a niche leader with an enterprise value of $19 billion, trading at an attractive 10x adjusted EBITDA, indicating Paradice's conviction in the combined entity's value creation and cross-selling potential.

Analysis

Paradice Investment Management LLC initiated a significant new position in Flowserve Corporation (FLS) during Q3 2025, acquiring 338,154 shares valued at $17.97 million. This investment constitutes 4.03% of Paradice's reportable assets under management, making FLS its 12th largest holding and signaling strong conviction despite FLS's recent underperformance against the S&P 500 by 20 percentage points. The shares were priced at $51.23 as of October 20, 2025.

The primary driver for Paradice's investment appears to be the impending "merger of equals" between Flowserve and Chart Industries (GTLS), which is expected to generate substantial synergies. Management projects $300 million in annual cost savings from this combination, which is a significant figure relative to the combined entity's current $1.6 billion EBITDA.

The combined company is anticipated to achieve an enterprise value of approximately $19 billion with $1.9 billion in adjusted EBITDA, implying an attractive valuation of around 10 times adjusted EBITDA. Paradice's substantial initial stake suggests a belief in the merger's potential to create a niche leader in industrial flow management and thermal solutions.

The fund likely sees significant value unlocking through cross-selling opportunities and operational efficiencies from combining complementary businesses. This strategic positioning by a major institutional investor provides a strong positive signal for FLS's future outlook post-merger, aligning with the overall strongly positive sentiment surrounding the news.

Key Decisions for Investors

• Investors should closely monitor the progress and integration of the Flowserve and Chart Industries merger, as its successful execution and realization of the projected $300 million in annual cost savings are critical for value creation.
• Consider the combined entity's projected valuation of 10x adjusted EBITDA, which Paradice finds attractive, and assess its potential to become a niche leader with enhanced cross-selling capabilities.
• Given Flowserve's recent underperformance, investors may want to re-evaluate FLS's long-term growth prospects and market positioning following the merger's completion, especially if synergies are realized.