Weir Group Regulatory News (WEIR)

4 Dec 2007 07:02

Weir Group PLC04 December 2007 The Weir Group PLC 4 December 2007 Weir agrees to acquire African pumps business for $231m (£113m). The Weir Group PLC ("Weir") is pleased to announce it has agreed to acquire theCH Warman Pump Group ("CHW"), a specialist pump business primarily focused onserving the mining and minerals processing industry throughout Africa, fromResearch and Development Pty Limited and CH Warman Holdings Pty Limited. The consideration for the purchase will be US$231m (£113m) payable in cash oncompletion. In addition Weir anticipates assuming approximately US$ 2m (£1m) ofnet indebtedness. Completion is conditional on the approval of the South Africancompetition authorities and, subject to such approval, is expected to take placein the first quarter of 2008. The acquisition is expected to be immediatelyearnings enhancing for Weir and to generate a return in excess of the Group'scost of capital within three years. The acquisition is in line with Weir's strategic objective to grow itsresource-linked engineering businesses through the addition of high-margin,high-aftermarket operations and the board of Weir believes that the acquisitionof CHW offers many benefits, including: • the addition of a well-established business with a considerable installed base of product and enjoying a high-level of customer loyalty; • a significantly enhanced presence in higher-growth mining markets throughout Africa; • a broadening of Weir's relationships among the world's major mining companies through increased sales volume and a wider product offering; and, • the opportunity to enhance the performance of CHW utilising Weir's logistics and manufacturing systems and expertise. Commenting on the transaction, Weir's chief executive, Mark Selway, said: "Thisis an exciting deal for our Minerals division, which transforms our presencethroughout the fast growing sub-Saharan markets. It's a perfectly-alignedacquisition right in our sweet spot of high-margin, high-wear applications inhigh-growth specialist markets. We look forward to working with the management team, workforce and dedicatedsupplier base at CHW; I believe that there are exciting prospects for all as westep-up efforts to satisfy the increasing customer demand for high-qualityproducts and service" Weir intends to acquire 100% of the issued share capital of: • Warman Africa (PTY) Limited, a company operating in South Africa:• Slurry Holdings Limited, a holding company registered in Malta, with operating subsidiaries in Ghana, Zambia, Namibia, Botswana, Morocco and Dubai; and,• Warman (Zimbabwe) (Pvt) Limited, a Zimbabwean company. As part of the transaction, Weir will also acquire intellectual propertyseparately held by Research and Development Pty Limited and by Mr Charles HWarman. CHW provides wear-resistant pumps, spare parts, and related services,principally for highly-abrasive mining, minerals processing and other industrialapplications. Operations comprise a principal manufacturing facility and headoffice located near Johannesburg, South Africa, together with seven branchesthroughout South Africa, and one each in Ghana, Zambia, Namibia, Botswana andZimbabwe, all offering sales, distribution and after sales services. Additionalsales offices are located in Dubai and Morocco. In total, the CHW businessemploys some 430 people. CHW's chief executive Jan Lourens and general managerNoel Raymond have agreed to remain with the business following its acquisitionby Weir. They will report to Gordon Bigam, European Regional Director of Weir'sMinerals Division. For the year to 30 June 2007, CHW generated sales of US$79.6m (£38.8m) earningsbefore interest and tax (EBIT) of (£8.7m) US$17.8m and profit before tax (PBT)of US$16.3m (£8.0m) under IFRS. As at 30 June 2007, gross assets were US$58.5m(£28.5m). In the unaudited management accounts for the three months to September2007, both revenue and operating profit are ahead of the prior year. The foundations of the CHW business date from 1938 and the acquisition willreunite CHW with Warman International, purchased by Weir in 1999, the twoelements having previously been under common ownership until 1969. Trading update The Group has also released today a separate statement on its pre close tradingupdate. END £1 = US$ 2.05 There will be a dial-in conference call for research analysts and investors at0900 hours (GMT) on 4 December 2007. Copies of the presentation will beavailable from our website: www.weir.co.uk Dial in detail: UK +44 (0)20 7806 1967 USA +1 718 354 1388 France +33 (0)1 7099 4304 Germany +49 (0)69 5007 1317 South Africa 0800 991 539Confirmation code: 4592925 Contact details:The Weir Group PLC Tel. 0141 637 7111Mark Selway, Chief ExecutiveKeith Cochrane, Finance DirectorHelen Walker, Public Relations Manager Tel. 0141 308 3739 (Mobile: 07789 032296) Maitland Tel. 020 7379 5151Suzanne Bartch (Mobile: 07769 710 335)Peter Ogden (Mobile: 07811 124 197) This information is provided by RNS The company news service from the London Stock Exchange