Weir Group PLC Acquisition (7426H)

TIDMWEIR

RNS Number : 7426H

Weir Group PLC

12 June 2017

Press Release

12 June 2017

Weir acquires leading oil and gas technology provider KOP Surface Products

   --              Acquisition of KOP(1) for c.US$114m (GBP89m(2) ) 
   --              Increases pressure control presence and installed base in Asia and Middle East 

-- Expands and complements Weir's portfolio of highly engineered mission-critical equipment

   --              Further strengthens Weir's position to benefit from oil and gas recovery 

-- Trading: Full year expectations unchanged with profits H2 weighted as previously indicated

The Weir Group PLC has entered into an agreement to acquire KOP Surface Products, a provider of advanced surface pressure control technologies, systems and services for the oil and gas industry for US$114m in cash. KOP's history stretches back to 1934 and it has leading market positions in Asia, with an emerging business in the Middle East. The business is being acquired from Akastor ASA, a Norwegian-listed investor in oilfield services.

KOP employs approximately 450 people and designs and manufactures wellheads, surface trees, valves, actuators and aftermarket services. The business is headquartered in Singapore and has a manufacturing facility in Batam, Indonesia, in addition to a network of sales and service offices in Asia Pacific and the Middle East. KOP's current management team will continue to lead the business, reporting into Weir's Oil & Gas division.

In the three years ending December 2016, KOP generated an average of US$117m in annual revenues and US$21m in annual EBITDA. In 2017 KOP is expected to generate revenues of c.US$46m and c.US$2m of EBITDA, reflecting current International oil and gas market conditions. Over the next two years integration costs are expected to total US$2m and generate run rate annual cost and procurement synergies of c.US$2m by the end of that period, with the potential for additional revenue synergies.

Completion is subject to the fulfilment of certain conditions and is anticipated to take place in Q3 2017. The transaction consideration payable to Akastor will be settled in cash, funded through the issue of new ordinary shares equivalent to approximately 2% of issued capital(3) . As corporate broker to Weir, UBS has entered into an agreement in connection with this issue of new ordinary shares. These shares will be issued, subject to market conditions, over the coming weeks up to the middle of August 2017 at a price determined by reference to average prices of ordinary shares over the period.

Trading: Order input trends in April and May were in line with expectations and the Group's full year guidance for 2017 is unchanged. As previously indicated, and reflecting these order trends, profits are expected to be weighted to the second half.

Commenting on the acquisition Weir Group Chief Executive Jon Stanton said:

"KOP is a great company with a strong management team that we have admired for some time. It is a natural fit for Weir and extends our range of wellhead and other pressure control solutions. KOP's position in Asia also complements Weir's leading presence in North America and the Middle East and means our group is in an even stronger position to benefit as oil and gas markets recover in the future."

Ends

Notes:

1 Weir will acquire 100% of KOP Surface Products for US$114m payable in cash on completion.

2 Exchange rate of $1 = GBP1.274 at closing in London on 09 June 2017.

3 Based on Weir Group closing share price on 09 June 2017.

About KOP Surface Products

KOP Surface Products is a leading global supplier of surface wellheads, surface trees, valves and actuators to the oil and gas industry. It provides full life-of-field support to customers, including installation, maintenance, rental and refurbishment services. Its client list includes some of the largest names in the industry and its products and quality programmes comply with the highest international standards. Accreditations include: ISO 9001:2008, API Q1, API 6A, API 16A, ISO 14001 and OHSAS 18001. The business employs 450 people and has leading positions across a number of countries in Asia Pacific, including Thailand, Indonesia and India, with a growing presence in the Middle East.

About The Weir Group PLC

Founded in 1871, Weir is one of the world's leading engineering businesses providing mission-critical equipment and aftermarket solutions to energy and natural resources customers in more than 70 countries. The group, which employs around 14,000 people, comprises three divisions: Minerals; Oil & Gas; and Flow Control, and is headquartered in Glasgow, Scotland, UK.

Weir's ordinary shares trade on the London Stock Exchange (ticker: WEIR LN) and its American Depositary Receipts trade over-the-counter in the USA (ticker: WEGRY).

 
 Enquiries: 
-----------------------------  --------------------------- 
 Investors: Stephen Christie    [phone] 
-----------------------------  --------------------------- 
                                [phone] / +44 
 Media: Raymond Buchanan         (0) 771 326 1447 
-----------------------------  --------------------------- 
 Brunswick: Patrick Handley     [phone] 
-----------------------------  --------------------------- 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

ACQBFLLFDQFZBBE

(END) Dow Jones Newswires

June 12, 2017 02:00 ET (06:00 GMT)