VANCOUVER (miningweekly.com) – UK-based mining equipment dealer Weir has signed a binding $1.29-billion accord to buy Portland, Oregon-based Esco – a local market leader in the mining, construction and industrial markets.
"We are acquiring a high-quality business at the right time, with the market in the early stages of its recovery, providing opportunities for long-term growth," Weir CEO Jon Stanton said in a statement.
Weir found Esco’s efforts to right-size and streamline its manufacturing portfolio over the past five years attractive, and Esco’s portfolio of products and custom engineered solutions that enhance customer productivity and safety is expected to accelerate Weir's own portfolio development through the expansion of minerals after-market opportunities.
The Esco business is expected to provide strong support for Weir’s growing comminution line of products, and its extensive footprint and dealer network in North America “represents a clear opportunity” for Weir’s crusher portfolio, the company said in a statement.
Esco designs and manufactures highly engineered mining equipment and consumables used mainly in surface mining, with one-third of Esco’s revenues derived from the construction sector. Esco is perhaps best known for its range of ‘ground engaging tools’ that include 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 acquisition will give Weir control of Esco’s global business, adding ten manufacturing facilities, six foundries and 22 service and supply centres, located in 19 countries around the world. It generates about 52% of its revenues in North America. Operating in more than 42 countries covering all key regions, Weir Minerals currently generate only 22% of its revenue from North America.
Weir said it intends to run Esco as a standalone business for the remainder of this year, with integration starting in 2019. However, after the deal closes, current chairperson Cal Collins will step down and join the Weir board as a nonexecutive director. The current president and COO Jon Owens will retain the current Esco leadership team and sales and supply chain structures.
The deal is not expected to impact on Esco's employee numbers or facilities and it will retain its Portland headquarters. The combined business will employ about 18 000 people with operations in over 70 countries
The board will also attempt to sell the noncore Flow Control division by 2019.
The acquisition has been approved by Weir’s board and is not subject to shareholder approval. The transaction is expected to close early in the third quarter, pending customary regulatory clearances.
Weir’s LSE-listed equity gained nearly 7% on Thursday at an intraday high of £2.26 a share.