Weir to buy Malaysia - based Linatex for £138m
- 02 August 2010
- Financial News
The Weir Group PLC ("Weir") has agreed to acquire the Linatex group of companies ("Linatex"), a global provider of wear-resistant products to the mining and sand & aggregates industries, based in Kuala Lumpur, Malaysia. A separate trading update has also been issued today regarding trading in respect of the 22 weeks ended 4 June 2010.
The consideration will be US$172.5m (£119.0m) payable in cash on completion and funded from existing bank facilities. In addition Weir anticipates assuming approximately US$27.5m (£19.0m) of net indebtedness and similar liabilities. Completion is conditional on regulatory approvals and, subject to such approvals, is expected to take place in the third quarter of 2010. The acquisition is expected to be accretive from 2011 for Weir and its returns are expected to exceed Weir's cost of capital from the second full year of ownership.
The acquisition is in line with Weir's strategy to grow its global capability, expand its emerging market footprint and further strengthen its aftermarket presence. The board of Weir believes that the acquisition will benefit the Group through:
- the addition both of the renowned Linatex brand and products that are strongly complementary to Weir's existing offering in minerals processing;
- enhanced global reach, Linatex having a geographic footprint well-aligned to Weir, together with an established emerging market base served from core manufacturing facilities in Malaysia and China;
- significant potential for expansion in the Canadian oil sands market through newly developed Linatex equipment, adding to Weir's existing presence;
- leveraging Weir Minerals' global sales network to sell Linatex's market-leading rubber products which are highly complementary to Weir's pumps, valves and cyclones, and offer many advantages over traditional metal linings.
Commenting on the transaction, Weir's chief executive, Keith Cochrane, said:
"The acquisition of Linatex creates great opportunities for our Minerals division. By combining Weir's expertise in pumps, valves and cyclones with Linatex's renowned rubber products and branding, we will have a highly complementary and competitive offering to satisfy our customers' demand for leading-edge products and service.
"Linatex's established manufacturing capability, particularly in Malaysia and China, and its extensive customer network, provides an excellent platform for growth. We welcome Linatex management and employees to the enlarged group and look forward to a successful future together."
Neil Macleod, group managing director of Linatex added:
"We are delighted that Linatex is joining a group with the same focus on high growth sectors in fast developing markets. There is great potential to enhance the overall offering to customers and thereby also create opportunity for employees and the continuation of the long tradition of the Linatex brand."