Weir Strengthens Presence In Fast Growing Mining Markets
The Weir Group PLC (“Weir”) has extended its leading presence and capabilities in global mining and oil sands markets with the acquisition of a leading Canadian based manufacturer of wear resistant linings. In addition, Weir’s best cost supply chain strategy has been advanced with the acquisition of a Malaysian foundry and agreement to acquire a heavy bay foundry in South Africa.
Both facilities are well placed to serve the fast growing mining markets of Africa and Asia-Pacific. The combined consideration for the three acquisitions will be £55m and funded from existing bank facilities.
Weir has acquired the R Wales group of companies (“R Wales”), a Canadian based manufacturer of specialist rubber and wear resistant linings for the mining, minerals processing and oil sands industries. The acquisition, which was completed on 15 February 2013, is expected to be immediately earnings accretive with post tax returns expected to exceed Weir’s cost of capital within the first full year of ownership.
With Canadian facilities in British Columbia and Ontario and a US facility in Arizona, R Wales designs and manufactures rubber lining for pipes, tanks, chutes and hoses and specialises in custom rubber and urethane moulded products, including wear parts and mill liners. In 2012, the Wales Group generated revenues in excess of C$30m. The acquisition extends Weir Minerals aftermarket position in the production and servicing of a wide range of rubber lined wear components for the North American oil sands and mining sectors and complements the existing customer base and product portfolio.
Foundry strategy developments
Weir has also advanced its global foundry supply chain strategy, completing the acquisition of the business and assets of the Cheong foundry in Malaysia, on 6 February 2013. Based near Kuala Lumpur, the facility supplies castings to a number of industries, including mining and power. The acquisition enables Weir Minerals to add foundry capacity to serve the Asia-Pacific region with high quality products from a best cost sourcing region. In addition, agreement has been reached to acquire the plant, equipment and buildings of Xmeco Foundry Pty. Ltd, a specialist large casting foundry in Port Elizabeth, South Africa. Xmeco expands Weir Minerals capacity and capability on the African continent, enabling the full product range to be locally produced. Subject to regulatory approval, completion is expected in May 2013.
Weir Chief Executive, Keith Cochrane, said: “The R Wales Group and the Cheong and Xmeco foundries enhance the Group’s presence in important growth markets. The Wales Group develops our leading aftermarket offering in the minerals and oil sands sectors, while the Cheong and Xmeco foundries expand our low cost capacity in the fast growing regions of Asia-Pacific and Africa, enabling us to deliver quality products more quickly to our customers.”
Source: The Weir Group PLC