Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,424.85 162.29 1.00%
S&P 500 1,862.31 19.33 1.05%
NASDAQ 4,086.22 52.06 1.29%
Ticker Volume Price Price Delta
STOXX 50 3,139.26 47.74 1.54%
FTSE 100 6,584.17 42.56 0.65%
DAX 9,317.82 144.11 1.57%
Ticker Volume Price Price Delta
NIKKEI 14,481.21 63.53 0.44%
TOPIX 1,172.50 5.95 0.51%
HANG SENG 22,696.01 24.75 0.11%

The Weir Group PLC : Acquisition



                       The Weir Group PLC : Acquisition

The Weir Group PLC
20 December 2012

Acquisition of Mathena, Inc
Broadens pressure control offering across upstream oil and gas markets

The Weir Group PLC ("Weir") has agreed to acquire Mathena, Inc ("Mathena"),  a 
leading provider of pressure control rental equipment and services for onshore
oil and  gas drilling  applications.   Consideration will  be via  an  initial 
payment of  US$240m  (£148m^[1])  with a  maximum  deferred  consideration  of 
US$145m payable over two years, contingent upon meeting profit growth targets.
 The effective acquisition  profit multiple  will be  reduced as  a result  of 
these payments.  The goodwill on acquisition will be tax deductible, with  the 
net present  value of  the cash  tax benefit  related to  the initial  payment 
expected to exceed U$40m.  The acquisition  will be funded from existing  bank 
facilities with forecast Weir 2012 proforma net debt to EBITDA^[2] of  c.1.5x. 
 Based on Q4 2012 estimates, Mathena's forecast annualised 2012 EBITDA^[2]  is 
US$49m.  

Mathena manufactures a range of pressure control products including  hydraulic 
chokes, mud-gas and shale-gas separators including proprietary technology  for 
fluid separation and containment designed to meet the increasing environmental
and safety requirements of shale  drilling.  In addition to its  manufacturing 
expertise, Mathena  differentiates itself  through a  strong customer  service 
culture, product innovation and the  ability to offer complete bespoke  rental 
and service packages.  The acquisition will increase the aftermarket focus  of 
Weir Oil &  Gas with approximately  80% of Mathena's  revenues generated  from 
equipment rental and 20% from related parts and service.

The acquisition is a strong strategic  fit with Weir Seaboard in the  pressure 
control market  and  supports the  expansion  of Weir's  flow  back  services. 
 Mathena further balances exposure between  the Oil & Gas division's  pressure 
pumping and pressure control operations and enables Weir to:

  * Provide pressure  control solutions  across the  drilling, completion  and 
    production lifecycles; 

  * Accelerate the  growth  of the  business  through Weir's  extensive  North 
    American and international footprint; 

  * Benefit from the technology  requirements of increasing environmental  and 
    safety regulation; 

  * Cross-sell  a  broader   pressure  control  portfolio   to  the   enlarged 
    complementary customer base; and  

  * Realise cost  and operational  synergies across  the value  chain  through 
    Weir's lean processes.  Total synergies are expected to exceed US$5m  p.a. 
    by the third year of ownership. 

Mathena accelerates Weir's strategy of  creating a Tier-1 provider of  surface 
pressure control  equipment and  services to  upstream onshore  unconventional 
markets. In addition to extending  Weir's addressable market by over  US$500m, 
the business  expands Weir's  presence in  the large  US drilling  market  and 
broadens its  pressure  control  customer base.   The  purchase  meets  Weir's 
acquisition criteria and will be immediately earnings accretive with post  tax 
returns expected to exceed Weir's cost  of capital within the first full  year 
of ownership.

The Mathena management team will remain with the business and are incentivised
as part  of  the earn  out  structure.  Subject to  US  regulatory  approvals, 
completion of the acquisition is expected on 31 December 2012.

Commenting on the  acquisition, Weir  Chief Executive,  Keith Cochrane,  said: 
"Mathenais a well-regarded business  in the US upstream  oil and gas  markets, 
with a  strong  management team  and  market  share in  the  pressure  control 
drilling markets.   This deal  is  a close  strategic  fit with  our  existing 
pressure control business and gives us a larger suite of products which we can
sell to the expanded customer base.  The business has strong growth  potential 
and increases our exposure to shale oil and gas, markets with attractive  long 
term structural growth prospects."

Mathena President  and CEO,  John  Mathena, said:  "Through joining  the  Weir 
Group, I believe that Mathena can continue to develop as a business  committed 
to innovation and service in one of the world's most exciting energy markets."

A presentation containing further information on the acquisition is  available 
from www.weir.co.uk.  

Contact details:  The Weir Group PLC
Andrew Neilson, Head of Corporate Affairs & Strategy Tel: +44 (0) 141 308 3750
Jonathan Milne, Communications Manager               Tel: +44 (0) 141 308 3781
                                                              +44  (0)771  378 
                                                     9536
        The Maitland Consultancy
        Peter Ogden, Rowan Brown                     Tel : 020 7379 5151

     

About Mathena, Inc

Headquartered in El  Reno, Oklahoma,  Mathena, Inc  is a  leading provider  of 
superior  quality  pressure  control   solutions  in  drilling   applications, 
supported through 12 service facilities  located in the key US  unconventional 
oil and  gas basins.  Mathena  products help  to  control, separate  and  vent 
abnormal pressures from the  well bore during  the drilling process.  Mathena, 
Inc was  founded  in 1990  by  Harold Mathena,  the  current chairman  of  the 
business.  Gross assets  at 31  December 2011  were US$75m  with 2011  profits 
before taxation  of  US$46m.  Weir  is  acquiring the  company  from  entities 
controlled by Harold Mathena and his family.

See www.mathena-inc.com for further information.

About The Weir Group PLC

Weir, a  FTSE  100 company  founded  in  1871 and  headquartered  in  Glasgow, 
Scotland, is a global provider of  engineering solutions to the minerals,  oil 
and gas and power sectors. Our commitment to engineering excellence,  research 
and customer focus extends equipment  wear life and operational capability  in 
some of the world's most challenging environments.

Weir is committed to going where our customers go, with a worldwide network of
more than 140 manufacturing facilities and service centres. The business has a
presence in more than  70 countries, with over  14,000 staff around the  world 
working in three divisions; Minerals, Oil & Gas and Power & Industrial. Weir's
customer base includes the world's  largest mining houses, major oil  services 
businesses and nuclear and conventional power generation companies.  

Annual revenues were more than £2.2 billion  in 2011, of which more than  half 
came from the provision of services and aftermarket support. Emerging  markets 
contributed around one third of overall Group revenues.

See www.weir.co.uk for further information.

[1] Exchange rate of £1 = 1.6269 US$  at closing in London on 19 Dec 2012
[2] EBITDA:  Earnings before  interest,  taxes, depreciation  and  intangibles 
amortisation.

 
 

------------------------------------------------------------------------------

This announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of
the
information contained therein.

Source: The Weir Group PLC via Thomson Reuters ONE
HUG#1666525
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement