Weir Group to buy mining tools maker Esco in $1bn deal

Weir plans to focus on its minerals and oil and gas businesses

Scottish engineering giant Weir Group has agreed to buy US mining tools producer Esco in a cash and share deal worth just over $1bn (£740m).

The announcement came as the company said it was putting its flow-control division up for sale.

The group said it planned to focus on its minerals and oil and gas businesses.

Shares in Glasgow-based Weir rose by as much as 6.5%, to 2,255p, in early trading in London.

Weir makes pumps and valves for the mining and energy industries, while Oregon-based Esco produces parts for the surface mining and construction sectors.

Under the terms of the acquisition, Esco shareholders will receive 59% of the deal value in cash, with the remainder in new Weir shares.

Weir plans to place about 16.7 million shares, or about 7.4% of its share capital, to partly fund the deal.

The transaction is expected to complete early in the third quarter of this year.

Weir chief executive Jon Stanton said: "Today we are announcing an important development of our portfolio as we focus on building on our core strengths in minerals and oil and gas.

"Together, Weir Minerals and Esco will create a unique customer proposition as the premium provider of mission critical surface mining solutions from extraction to concentration, built on proprietary technology, superior wear life and supported by an unrivalled service network."

Weir's flow-control division, which designs and manufactures process pumps and valves for the power, oil and gas industries, contributed about 15.5% of the group's total revenue last year.

The division employs 250 workers in Alloa, Clackmannanshire, and 200 in Elland, West Yorkshire. It also has bases in France, Italy, South Korea, India and the US.

In a trading update, Weir also reported that its first-quarter orders rose by 22%, with orders in its mining business increasing by more than 13%.

Oil and gas orders were also up by more than 50%, helped by higher demand for pressure pumps in North America.