Weir Group makes £89m swoop for Singaporean rival

● Acquisition of KOP will add about 450 staff to Weir’s 14,000-strong headcount

Glasgow-based engineer Weir Group has struck a deal to buy a Singapore-headquartered wellhead services outfit for $114 million (£89m) in cash.

The firm is buying KOP Surface Products, which employs about 450 people, from Norway’s Akastor. Weir Group said the deal would expand its presence in the pressure control market in Asia and the Middle East as it seeks to strengthen its position amid a recovery in the oil and gas sector.

KOP, which traces its roots back to 1934, designs and manufactures wellheads, surface trees, valves, actuators and aftermarket services.

The company also has a manufacturing facility in Indonesia, along with a network of sales and service offices across the Asia Pacific and Middle East. Its management team will continue to lead the business, reporting into Weir’s oil and gas division.

Jon Stanton, who took over as the Scottish company’s chief executive from Keith Cochrane in October, said yesterday: “KOP is a great company with a strong management team that we have admired for some time. It is a natural fit for Weir and extends our range of wellhead and other pressure control solutions.”

He added: “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.”

In the three years to December 2016, KOP made an average of $117m in annual revenues and $21m in underlying pre-tax profits. It is expected to delver earnings of about $2m this year, on sales of $46m.

The acquisition, targeted for completion during the third quarter, will be settled in cash, funded by the issue of new Weir shares equivalent to about 2 per cent of its issued capital.

It comes after the FTSE 250 firm, which employs about 14,000 people around the globe, recently signalled an upturn in its key markets as it announced a 50 per cent jump in orders from the oil and gas industry, boosted by “significant” growth in onshore activity across North America.

The group, which makes pumps, valves and crushing equipment for the energy and mining industries, said in April that it was well placed to benefit from increased activity levels, with overall orders for the first three months of the year up 15 per cent.

However, it noted that “pricing levels remain depressed, with only slight improvements achieved in certain minor product lines”, while progress in North America had been partially offset by a slight decline in the Middle East, where customers were reducing activity and postponing orders and maintenance.

Announcing a 22 per cent slide in annual profits in February, Stanton said that the group had enjoyed a return to growth in the final three months of 2016 as commodity prices picked up after what he described as a “challenging and prolonged” downturn.