ITT Inc. (ITT) announced Friday it's acquiring SPX FLOW from private equity firm Lone Star Funds for $4.775 billion, a deal that significantly expands its footprint in industrial flow and process technologies.
The transaction is structured as a mix of cash and $700 million in ITT common stock going to Lone Star. ITT plans to cover the cash portion through a combination of new debt and equity financing. At 14.2 times SPX FLOW's projected 2026 adjusted EBITDA, the valuation looks a bit steep at first glance, but that multiple drops to 11.5x when you factor in the cost synergies ITT expects to realize.
The Strategic Fit
SPX FLOW will fold into ITT's Industrial Process segment, which pulled in roughly $1.4 billion in revenue during 2024 and $384 million in the third quarter of 2025 alone. The acquisition adds complementary technologies that let ITT serve a broader range of high-growth end markets, including industrial, chemical, energy, mining, nutrition, and health and personal care sectors.
Here's what makes SPX FLOW attractive: over the 12 months ending September 27, 2025, the company generated $1.3 billion in revenue with a roughly 42% gross margin and 22% adjusted EBITDA margin. Perhaps most importantly, 43% of sales came from aftermarket services, which typically deliver higher margins and more predictable recurring revenue.
Financial Engineering and Timeline
ITT expects to close the deal by the end of the first quarter of 2026, subject to standard regulatory approvals. The company projects it will maintain its investment-grade credit rating, with net leverage initially below 3.0x and dropping under 2.0x within roughly 18 months after closing.
Management is targeting $80 million in annualized cost synergies by year three post-close. The deal should immediately boost both gross and adjusted EBITDA margins, with adjusted earnings per share accretion expected in 2026 and double-digit growth anticipated in the first full year after closing, excluding intangible amortization.
As of September 27, ITT held $516.4 million in cash and cash equivalents on its balance sheet.
Market Reaction: ITT shares dropped 2.49% to $178.83 in premarket trading Friday, according to market data.
