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Scots firm acquires Singapore business

Weir positions for oil recovery with $114m deal

Jon StantonWeir Group is positioning itself for a recovery in the oil and gas sector after acquiring Singapore-based oil services company KOP Surface Products in a $114 million cash deal.

KOP is a provider of advanced surface pressure control technologies, systems and services for the oil and gas industry.  

The company, established in 1934, has leading market positions in Asia, with an emerging business in the Middle East.  The business is being acquired from Akastor ASA, a Norwegian-listed investor in oilfield services.  

KOP employs 450 and designs and manufactures wellheads, surface trees, valves, actuators and aftermarket services.  It has a manufacturing facility in Batam, Indonesia, in addition to a network of sales and service offices in Asia Pacific and the Middle East.  

The management team will continue to lead the business, reporting into Glasgow-based Weir’s oil & gas division.

In the three years ending December 2016, KOP generated an average of US$117m in annual revenues and US$21m in annual EBITDA.  In 2017 KOP is expected to generate revenues of c.US$46m and c.US$2m of EBITDA, reflecting current International oil and gas market conditions. 

Over the next two years integration costs are expected to total US$2m and generate run rate annual cost and procurement synergies of c.US$2m by the end of that period, with the potential for additional revenue synergies.   

Completion is subject to the fulfilment of certain conditions and is anticipated to take place in Q3 2017.  The transaction consideration payable to Akastor will be settled in cash, funded through the issue of new ordinary shares equivalent to approximately 2% of issued capital.

Weir Group Chief Executive Jon Stanton said“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.  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 an update, Weir said order input trends in April and May were in line with expectations and the Group’s full year guidance for 2017 is unchanged.  As previously indicated, and reflecting these order trends, profits are expected to be weighted to the second half.

 

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