25th Feb 2019 09:00
LONDON (Alliance News) - Weir Group PLC said Monday it has agreed to sell its Flow Control unit for GBP275 million in cash to private equity firm First Reserve as it looks to focus its portfolio.
Weir proposed the sale of its Flow Control unit in April 2018 alongside its cash-and-shares purchase of mining equipment firm ESCO Corp for USD1.3 billion. The Flow Control unit provides pumps and valves for power, industrial and downstream oil & gas applications.
The GBP275 million enterprise value sale of the Flow Control business is subject to working capital and debt-like adjustments at closing and is subject to regulatory approval.
The deal is expected to close in the second quarter of 2019. Following the sale, 80% of pro forma revenue at Weir will be derived from the "attractive aftermarket-intensive mining and upstream oil and gas markets", Weir said.
In 2018, Flow Control generated pretax profit of GBP23 million. For comparison, in 2017 - the last full year results released by the FTSE 250-listed firm - saw Weir generate GBP250 million pretax profit on revenue of GBP2.37 billion.
"We are pleased to announce the sale of Flow Control to First Reserve," Weir Chief Executive Officer Jon Stanton said. "This is a high-quality business with great people and I'd like to thank the team for their longstanding contribution to the group and dedication throughout the sale process."
"The decision to sell Flow Control is part of Weir's recent portfolio transformation which focuses the group on where we can maximise long-term value - building on our strong global leadership positions in mining and upstream oil and gas markets", Stanton added.
Shares in Weir were 0.5% lower at 1,620.00 pence on Monday.
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