The Weir Group announced that it 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 £275m, payable in cash and subject to customary working capital and debt-like adjustments at closing. The transaction remains subject to certain regulatory and other approvals, with completion expected in the second quarter of 2019.
Flow Control primarily provides pumps, valves and other solutions used in power, industrial and downstream oil and gas applications. The plan to sell the division was first announced on April 19, 2018 alongside the acquisition of ESCO, which further strengthened Weir’s leadership position in global mining markets. Once this transaction completes, on a pro forma basis, more than 80 percent of Weir’s revenues will be from aftermarket-intensive mining and upstream oil and gas markets.
“We are pleased to announce the sale of Flow Control to First Reserve," Weir CEO Jon Stanton said. "This is a high-quality business with great people and I’d like to thank the team for their longstanding contribution to the Group and dedication throughout the sale process.
"The decision to sell Flow Control is part of Weir’s recent portfolio transformation which focuses the Group on where we can maximize long-term value - building on our strong global leadership positions in mining and upstream oil and gas markets.”
After the sale completes, Flow Control will continue to be led by current president David Paradis and his management team.
The transaction is subject to customary regulatory approvals.
Weir will retain the UK defined benefit pension liabilities of Flow Control and accordingly has agreed with the trustees to make a £4m one-off contribution from the proceeds of the sale to the Group’s UK defined benefit scheme, which was closed to future accrual in 2015. In addition, certain of Weir’s US subsidiaries will retain the Flow Control legacy asbestos exposure together with corresponding insurance and will provide customary indemnification to First Reserve. The net proceeds of the sale will be used for general corporate purposes, including to further reduce leverage and to fund future investment in growth in our core platforms.