Weir has entered into a binding agreement to acquire ESCO Corporation, the US company based in Portland, Oregon, for an equity value of $1.051 billion and an estimated enterprise value of $1.285 billion. ESCO is the global market leader in highly engineered GET for surface mining and construction.
“ESCO is a global business with 10 manufacturing facilities, 6 foundries and 22 service and supply centres in 19 countries around the world, with its core strength in North America, representing 52% of its revenue. This compares with Weir’s unrivalled global minerals equipment service network, with approximately 100 service centres delivering a presence close to every major mine site in the world. Operating in more than 42 countries covering all key regions, just 22% of Weir Minerals revenue comes from North America.”
“Leveraging Weir’s global network will significantly increase the number of direct customer relationships available to ESCO. The ESCO business will also provide strong support for Weir’s growing comminution offering, with an extensive footprint and dealer network in North America representing a clear opportunity for Weir’s crusher portfolio. ESCO will accelerate Weir’s portfolio development through the expansion of Minerals aftermarket opportunities. The business designs, and manufactures highly engineered GET used primarily in surface mining, with one-third of ESCO revenues from construction. ESCO’s GET includes cutting edge wear parts such as teeth, shrouds, adaptors, blades and locking systems that are installed on the lip systems of mission critical mining equipment. The business has chosen to focus on its core strengths in GET and has divested and exited a number of non-core activities in the last five years.”
“ESCO’s customers include the leading global mining companies with ESCO product installed on some 40% of large primary mover machines. ESCO GET typically last significantly longer than rival products and are easier to maintain and replace. The innovative Nemisys® lip system and Ultralok® mining tooth system are more reliable, improve wear life and reduce downtime.”
“ESCO is a 105 year old family business that shares Weir’s values and priorities. It has achieved a leadership position by consistently delivering high quality products to its customers, underpinned by innovation that has resulted in some 1,800 patents and the development of a world-class innovation centre in Portland. In the last three months, Weir has had extensive access to the ESCO leadership team, facilities and shareholders as part of a highly collaborative process. The equity consideration will enable ESCO shareholders to benefit from the success of the combined business, and the high quality and long-standing ESCO team will join Weir.”
The acquisition has been approved by the Board of Directors of Weir and is not subject to Weir shareholder approval. The transaction is expected to complete in early Q3 2018.