Weir will fund the acquisition through new and existing bank facilities, the Glasgow-based company said in an e-mailed statement today. Houston, Texas-based Seaboard provides equipment for the oil-and-gas drilling market, such as high pressure hydraulic fracturing, as well as associated field and support services.
“We are confident that the extended market opportunities and medium-term operational benefits will create significant value,” Chief Executive Officer Keith Cochrane said in the statement. The company retains the “financial flexibility to pursue organic growth initiatives and further acquisition opportunities,” he added.
Cochrane is extending Weir’s reach into upstream equipment, including pressure control gear for wellheads, as energy companies seek to increase drilling activity at more complex sites.
The purchase of Seaboard will be accretive to earnings immediately, and post-tax returns will exceed Weir’s cost of capital by 2014. Weir is paying about 11.64 times earnings. The U.S. company is forecast to have earnings before interest, tax, depreciation and amortization of $58 million on sales of $216 million.
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