Weir Group acquiring KOP Surface Products for $114m
Weir Group announced on Monday that it had entered into an agreement to acquire KOP Surface Products, a provider of advanced surface pressure control technologies, systems and services for the oil and gas industry for $114m in cash.
The FTSE 250 company said KOP - which held “leading” market positions in Asia, with an emerging business in the Middle East - was being acquired from Akastor ASA, a Norwegian-listed investor in oilfield services.
KOP reportedly employs approximately 450 people and designs and manufactures wellheads, surface trees, valves, actuators and aftermarket services.
The business is headquartered in Singapore and has a manufacturing facility in Batam, Indonesia, in addition to a network of sales and service offices in the Asia Pacific region and the Middle East.
KOP's current management team would continue to lead the business, Weir confirmed, reporting into its oil and gas division.
In the three years ending December 2016, KOP generated an average of $117m in annual revenues and $21m in annual EBITDA.
KOP was expected to generate revenues of around $46m, and $2m of EBITDA in the current year, which Weir said reflected current international oil and gas market conditions.
Over the next two years integration costs were expected to total $2m and generate run rate annual cost and procurement synergies of $2m by the end of that period, with the potential for additional revenue synergies.
Completion remained subject to the fulfilment of certain conditions and was anticipated to take place in the third quarter.
The transaction consideration payable to Akastor would be settled in cash, funded through the issue of new ordinary shares equivalent to approximately 2% of issued capital.
As corporate broker to Weir, UBS had entered into an agreement in connection with this issue of new ordinary shares.
The shares would be issued, subject to market conditions, over the coming weeks up to the middle of August 2017 at a price determined by reference to average prices of ordinary shares over the period.
On its current trading, Weir reported that order input trends in April and May were in line with expectations, and the group's full year guidance for 2017 remained unchanged.
As it had previously indicated, and reflecting those order trends, profits were expected to be weighted to the second half.
“KOP is a great company with a strong management team that we have admired for some time,” said Weir chief executive Jon Stanton.
“It is a natural fit for Weir and extends our range of wellhead and other pressure control solutions.
“KOP's position in Asia also complements Weir's leading presence in North America and the Middle East and means our group is in an even stronger position to benefit as oil and gas markets recover in the future.”