(Reuters) -U.S.-based equipment manufacturer Chart Industries ( GTLS ) and flow control systems maker Flowserve Corp ( FLS ) agreed to merge in an all-stock deal, valuing the combined company at about $19 billion.

The deal is expected to help the combined entity take advantage of strong demand for industrial equipment and aftermarket services.

The demand stems from growing global investments in artificial intelligence and modern data centers, which require advanced cooling and fluid handling systems to help power computer systems and servers.

"The focus of the merger looks to be on creating an aftermarket powerhouse, with aftermarket services comprising about 42% of the combined entity," said BTIG analyst Gregory Lewis.

Chart manufactures industrial equipment such as valves and measurement technology for gas and liquid molecule handling, while Flowserve ( FLS ) makes valves, seals and industrial pumps.

Last month, Chart posted a 5.3% rise in its first-quarter revenue and said it would evaluate deals that focus on repair and services, among other areas.

Under the terms of the deal, Chart shareholders will receive 3.165 shares of Flowserve's ( FLS ) common stock for each share held, the companies said.

Shareholders of Chart will own about 53.5% of the combined company, while Flowserve ( FLS ) shareholders will hold the rest.

Chart had a market capitalization of $7.26 billion, as of stock's last close, according to data compiled by LSEG, while Flowserve's ( FLS ) valuation stood at $6.6 billion.

The deal is expected to generate about $300 million in annual cost savings within three years of the transaction, which is expected to close in the fourth quarter of this year.

Flowserve ( FLS ) CEO Scott Rowe will lead the combined company, while Chart CEO Jill Evanko will serve as the board chair.

The new company will operate under a new name and brand, which will be announced upon the deal closing, the companies said.

(Reporting by Anshuman Tripathy in Bengaluru; Editing by Leroy Leo and Shinjini Ganguli)