SHARES in Glasgow-headquartered engineering business Weir Group remained broadly flat yesterday, as the firm issued 16.8 million new shares to help fund its acquisition of American tools business ESCO Corporation.
The deal, which was announced in April and closed yesterday, valued ESCO at $1.3 billion.
Using the proceeds raised from the share issue, Weir paid 59% of that value in cash, with the balance due to the ESCO shareholders being paid in newly issued Weir shares.
Read more: Weir cheers investors with major US deal
Weir’s shares were broadly unaffected by the deal, closing 0.6% up at £19.71. When the deal was announced in April Weir’s shares received a six per cent bump to £22.50, but have been on a downward trajectory since.
Weir has confirmed that ESCO will operate as a new division in the larger firm, reporting separately alongside the firm’s minerals and oil and gas segments.
ESCO’s chief operating officer Jon Owens, who has been with that business since 1986, will lead the division and will also take a seat on Weir’s group executive.
ESCO chairman and chief executive Cal Collins, meanwhile, has joined Weir’s board as a non-executive director.
Read more: Weir boosted as investors back revamped pay policy
Weir has yet to sell its loss-making flow control division, which was announced at the same time as the ESCO deal.
The firm said at the time it would use the proceeds of that sale to reduce debt and fund future investment to grow its minerals and oil and gas divisions.
Speaking about the ESCO acquisition, Weir chief executive Jon Stanton said the deal “adds another premium brand” to the group’s portfolio of products and services.
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