Weir snaps up Novatech for $176m

Industrial engineer Weir has agreed to acquire US oil and gas pump valve maker Novatech for $176m (£113m) in cash.

Novatech manufactures a variety or proprietary valves and valve seats for high pressure applications such as farce, cement and mud pumps used in unconventional upstream oil and gas operations.

Weir is looking to further strengthen its presence in the US unconventional oil and gas markets following the recent $675m acquisition of wellhead solutions provider Seaboard Holdings which was completed in December.

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"Novatech is a respected brand in the US upstream oil and gas markets, with strong market share in the frac consumables market," said Weir's Chief Executive Keith Cochrane.

"This deal enables Weir to broaden our aftermarket expendable product portfolio in this fast-growing sector, where increasing operating intensities require equipment and components to be more regularly replaced and serviced," he said.

Novatech generated proforma revenues of $61.6m in the year ended September 30th 2011, representing annual revenue growth of 88%. Earnings before interest, tax, depreciation and amortisation totalled $25.2m.

The transaction will be funded by existing bank facilities and is expected to be immediately earnings accretive with post tax return anticipated to exceed Weir's cost of capital within the first full year of ownership, the group said.

The acquisition is subject to the usual US regulatory approvals but Weir expects it to be completed by next month.

BC