Weir Group, the FTSE 100 engineering company servicing the oil, gas and power sectors, is to pay $675m for the US wellhead specialist Seaboard.
The deal, which is subject to regulatory approval, is expected to complete in December. The transaction is payable in cash and will be funded from new and existing bank facilities.
For the year to 31 December 2011, Seaboard is forecast to achieve proforma revenues of $216m and earnings before interest, tax, depreciation and amortisation of $58m. Its headquarters are located in Houston, Texas but the firm has over 20 locations covering the major oil & gas basins in North America. Seaboard employs approximately 400 people.
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Weir believes that "Seaboard's range of high-end surface equipment is directly adjacent to Weir's market leading portfolio of frac pumps and other well completion equipment."
As Weir points out, the process known as "fracking" or hydraulic fracturing has seen significant growth , especially in the north American market, in recent years, and this is where Seaboard has a particular speciality.
Commenting on the acquisition, Weir Chief Executive, Keith Cochrane, pointed out that revenues from Seaboard won't stop at the point of installation: "(Seaboard) broadens our product offering and fits into our business model of growing the installed base of original equipment from which we drive aftermarket opportunities."
When he says "aftermarket opportunities" he means the fees the combined group will get from servicing the equipment.
The current senior management group at Seaboard plans to remain with Weir, including Kelly Joy, President and CEO.
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