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Weir Group Sells Entire Oil Division

Andreas Exarheas
·2 min read
Weir Group Sells Entire Oil Division
Weir Group Sells Entire Oil Division

This article was first published on Rigzone here

The Weir Group plc (LON: WIER) has announced that it has entered into an agreement for the all-cash sale of its entire oil and gas division to Caterpillar Inc. (NYSE: CAT) for $405 million (GBP 314 million).

The deal, which is subject to customary working capital and debt-like adjustments at closing, follows an announcement from Weir in February that it would seek to maximize value from its oil and gas division as it continued its transformation into a premium mining technology pure play. 

Assuming normal regulatory clearances, the deal is expected to complete by the end of the year. Net proceeds from the deal will reduce Weir’s leverage, according to the company, which added that the deal facilitates a $70 million U.S. cash tax benefit for Weir over the medium term.

“We are pleased to have reached this agreement that delivers a great home for the oil and gas division and maximizes value for our stakeholders,” Jon Stanton, Weir Group’s chief executive officer, said in a company statement.

“Alongside the previous sale of the flow control division and the acquisition of ESCO, it is a major milestone in transforming the group into a focused, premium mining technology business,” he added.

“It means Weir is ideally positioned to benefit from long-term structural demographic trends and climate change actions which will increase demand for essential metals that must also be produced more sustainably and efficiently. This will require the innovative engineering and close customer partnerships that define Weir, and it is why we are so excited about the future,” Stanton went on to say.

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Commenting on the deal, Joe Creed, the vice president of Caterpillar’s oil and gas and marine division said, “combining Weir Oil & Gas’s established pressure pumping and pressure control portfolio with Cat’s engines and transmissions enables us to create additional value for customers”.

“This acquisition will expand our offerings to one of the broadest product lines in the well service industry,” he added.

Weir Oil & Gas provides superior products and service solutions to upstream markets, according to Weir’s website, which shows that the segment recorded revenues of $239 million (GBP 185 million) in the first half of this year. The segment registered an adjusted operating loss of $5 million (GBP 4 million) in 1H 2020, Weir’s website highlighted.

Caterpillar has been helping customers with their oil and gas power solutions for over 80 years, according to its website. The company is active in several oil and gas sectors, including onshore and offshore production, gas compression and well services.

To contact the author, email andreas.exarheas@rigzone.com

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