The Weir Group plc has entered into an agreement to sell its Flow Control division to private equity investment firm First Reserve for an enterprise value of £275 million.
Flow Control specialises in highly engineered valves, pumps and controls for the global power generation, downstream oil & gas and industrial sectors. After the sale is completed, Flow Control will continue to be led by current president David Paradis and his management team.
Weir announced last April that it planned to sell the division.
“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,” said Weir Group CEO Jon Stanton.
“First Reserve has deep historical experience creating value for our investors in the flow control space, and we are pleased to partner with Weir in this carve-out transaction,” said Jeff Quake and Neil Hartley, managing directors of First Reserve. “In our view, Weir Flow Control represents an attractive growth platform in a fragmented sector, with internationally recognized brands driven by recurring high-margin aftermarket parts and services which have proven to be resilient through multiple economic environments. We look forward to supporting David Paradis and his talented management team to promote both organic growth and acquisitive expansion of the platform as we seek to drive value on behalf of our investors.”
The transaction remains subject to certain regulatory and other approvals, with completion expected in the second quarter of 2019.
Once the sale of the Flow Control division is completed, on a pro forma basis, more than 80% of Weir’s revenues will be from aftermarket-intensive mining and upstream oil and gas markets.
Weir will use the net proceeds of the sale for general corporate purposes, including to further reduce leverage and to fund future investment in growth in its core platforms.