The Weir Group has entered into an agreement to sell its Flow Control division to First Reserve, a global private equity investment firm focused exclusively on energy, for an enterprise value of £275 million ($360 million).
Weir, which will receive cash for the sales, said all the way back in April 2018 that it planned to sell the division. The admission came alongside the acquisition of ESCO. The transaction remains subject to certain regulatory and other approvals, with completion expected in the June quarter, the company said.
The Flow Control division primarily provides highly engineered pumps, valves and other solutions used in power, industrial and downstream oil and gas applications, according to Weir.
Weir said: “Once this transaction completes, on a pro forma basis, more than 80% of Weir’s revenues will be from attractive aftermarket-intensive mining and upstream oil and gas markets.”
Weir Group CEO, Jon Stanton, said: “The decision to sell Flow Control is part of Weir’s recent portfolio transformation which focuses the group on where we can maximise long-term value – building on our strong global leadership positions in mining and upstream oil and gas markets.”
Jeff Quake and Neil Hartley, Managing Directors of First Reserve, said: “In our view, Weir Flow Control represents an attractive growth platform in a fragmented sector, with internationally recognised brands driven by recurring high-margin aftermarket parts and services which have proven to be resilient through multiple economic environments.”
After the sale completes, Flow Control will continue to be led by current President David Paradis and his management team, Weir said.
In the year to December 31, 2018, Flow Control’s unaudited financial results included profit before tax of £23 million on a pre-exceptional items and intangibles amortisation basis.