Shore reviews Weir rating after oil and gas deal

Shore Capital put its rating on Weir Group under review from 'hold' after the company agreed to sell its oil and gas business in a move the broker said was positive.

After saying in February that it wanted to sell the oil and gas operation Weir announced on Monday it had struck a £314m deal to sell the business to Caterpillar for cash.

Shore said the sale would make Weir more resilient and less exposed to the economic cycle, leaving it as a pure-play mining technology business. The FTSE 250 company will use the money to reduce its leverage and invest in mining growth opportunities.

"While we are slightly surprised by the timing of the sale given the current oil and gas conditions, we are pleased to see the proposed transaction at a reasonable price, and which significantly changes Weir investment case," Shore analysts Akhil Patel and Tom Fraine wrote in a note to clients.

The analysts kept their £12.80 price target on the shares. Weir shares rose 15% to £14.72 at 14:45 BST.