Weir Group Agrees to Sell Oil & Gas Division to Caterpillar for $405 Million; Shares Rise -- Update
October 05 2020 - 4:35AM
Dow Jones News
-- Weir Group has agreed to sell its Oil & Gas division to
Caterpillar for $405 million.
-- The FTSE 250 group is seeking to focus on its
mining-technology business and will use the money to reduce
leverage.
-- Caterpillar said the deal, which includes 40 locations and
around 2,000 employees, will enable it to create additional
value.
By Jaime Llinares Taboada
Shares of Weir Group PLC jumped Monday in early trading, after
the company said it agreed to sell its Oil & Gas division to
Caterpillar Inc. for $405 million in cash.
The FTSE 250 engineering company said the deal follows its
strategy of becoming a pure mining-technology company. The proceeds
will be used to reduce leverage and the sale will provide earnings
stability, Weir Group said.
"Alongside the previous sale of the flow control division and
the acquisition of ESCO, it is a major milestone in transforming
the group into a focused, premium mining technology business," said
Chief Executive Jon Stanton.
In February, the Scotland-based company said it was looking to
"maximize value from the Oil & Gas division," pointing to
shorter cycles and higher levels of volatility, as well as a
challenging market backdrop. Weir Oil & Gas revenue fell 25% in
2019, and plunged 48% in the first half of 2020 from a year
earlier.
Caterpillar, a provider of equipment to mining and building
companies that is listed on the New York Stock Exchange, said the
deal will enable it to create additional value for customers. "This
acquisition is consistent with Caterpillar's strategy to invest for
long-term, profitable growth through operational excellence,
expanded offerings and services," it said.
Weir Oil & Gas produces a full line of pumps, flow iron,
consumable parts, wellhead and pressure control products. The
transaction includes 40 manufacturing and services locations and
around 2,000 employees, Caterpillar said.
The acquisition is subject to Weir shareholders' approval,
review by various regulatory authorities and customary closing
conditions.
Shares in Weir Group at 0743 GMT were up 14% at 1,456.0
pence.
Write to Jaime Llinares Taboada at jaime.llinares@wsj.com;
@JaimeLlinaresT
(END) Dow Jones Newswires
October 05, 2020 04:20 ET (08:20 GMT)
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