The Weir Group PLC : Acquisition
The Weir Group PLC
20 February 2013
WEIR STRENGTHENS PRESENCE IN FAST GROWING MINING MARKETS
Acquisition of the R Wales group of companies and Cheong foundry; agreement to
acquire Xmeco foundry
The Weir Group PLC ("Weir") has extended its leading presence and capabilities
in global mining and oil sands markets with the acquisition of a leading
Canadian based manufacturer of wear resistant linings. In addition, Weir's
best cost supply chain strategy has been advanced with the acquisition of a
Malaysian foundry and agreement to acquire a heavy bay foundry in South
Africa. Both facilities are well placed to serve the fast growing mining
markets of Africa and Asia-Pacific. The combined consideration for the three
acquisitions will be £55m and funded from existing bank facilities.
Weir has acquired the R Wales group of companies ("R Wales"), a Canadian based
manufacturer of specialist rubber and wear resistant linings for the mining,
minerals processing and oil sands industries. The acquisition, which was
completed on 15 February 2013, is expected to be immediately earnings
accretive with post tax returns expected to exceed Weir's cost of capital
within the first full year of ownership.
With Canadian facilities in British Columbia and Ontario and a US facility in
Arizona, R Wales designs and manufactures rubber lining for pipes, tanks,
chutes and hoses and specialises in custom rubber and urethane moulded
products, including slurry pump wear parts and mill liners. In 2012, the Wales
Group generated revenues in excess of C$30m. The acquisition extends Weir's
aftermarket position in the production and servicing of a wide range of rubber
lined wear components for the North American oil sands and mining sectors and
complements the existing customer base and product portfolio.
Foundry strategy developments
Weir has also advanced its global foundry supply chain strategy, completing
the acquisition of the business and assets of the Cheong foundry in Malaysia,
on 6 February 2013. Based near Kuala Lumpur, the facility supplies castings to
a number of industries, including mining and power. The acquisition enables
Weir to add foundry capacity to serve the Asia-Pacific region with high
quality products from a best cost sourcing region. In addition, agreement has
been reached to acquire the plant, equipment and buildings of Xmeco Foundry
Pty. Ltd, a specialist large casting foundry in Port Elizabeth, South Africa.
Xmeco expands Weir's capacity and capability on the African continent,
enabling the full product range to be locally produced. Subject to regulatory
approval, completion is expected in May 2013.
Weir Chief Executive, Keith Cochrane, said: "The R Wales Group and the Cheong
and Xmeco foundries enhance the Group's presence in important growth markets.
The Wales Group develops our leading aftermarket offering in the minerals and
oil sands sectors, while the Cheong and Xmeco foundries expand our low cost
capacity in the fast growing regions of Asia-Pacific and Africa, enabling us
to deliver quality products more quickly to our customers."
Contact details: The Weir Group PLC
Andrew Neilson, Head of Corporate Affairs & Tel: + 44 141 308 3750
Jonathan Milne, Communications Manager Tel: + 44 141 308 3781/ + 44
The Maitland Consultancy: Peter Ogden Tel: + 44 207 379 5151
About Weir Minerals
Weir Minerals is the global leader in the provision of slurry handling
equipment and associated aftermarket support for abrasive high wear
applications used in the mining and oil sands markets. The division's
leadership position is reinforced by materials development carried out at
research centres worldwide and a leading presence in key mining markets, with
around 100 service facilities providing rapid customer support. The division
achieved revenues of more than £1.3bn in 2011.
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
around 200 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.
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Source: The Weir Group PLC via Thomson Reuters ONE
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