UK's Weir To Buy U.S. Mining Tools Maker ESCO For $1.05B
April 19 (Reuters) - Weir Group Plc, which makes pumps and valves for mining and energy industries, said it would buy ESCO Corp, a U.S.-based maker of equipment parts, for an equity value of $1.05 billion as it looks to bolster its mining business.
Equipment makers like Weir have benefited from higher commodity prices as mining companies boost spending and also look to explore brownfield projects.
Weir also said it would start a process to sell its flow- control division, which designs and manufactures process pumps and valves for power, oil and gas industries.
The flow-control business contributed $365 million pounds in revenue, or about 15.5 percent of its total revenue, last year.
Weir shares rose as much as 6.5 percent to 2,255 pence in morning trade in London.
Weir said Portland, Oregon-based ESCO, with an enterprise value of $1.29 billion, makes parts for surface mining and construction industries, including ground engaging tools to move earth.
ESCO shareholders will receive 59 percent of the deal value in cash and the remaining in new Weir shares.
Weir plans to place about 16.7 million shares, or about 7.4 percent of its share capital, to partly fund the deal.
The deal is expected to add to earnings per share in the first full year post completion, expected in early third quarter, Weir said.
Weir said its first-quarter orders rose 22 percent, with orders in its mining business increasing more than 13 percent. Oil and gas orders rose more than 50 percent, helped by higher demand for pressure pumps in North America.
Weir maintained its full-year growth outlook for revenue and profit, on a constant currency basis.
(Reporting by Arathy S Nair in Bengaluru; Editing by Gopakumar Warrier)
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