Caterpillar Inc. agreed to buy Weir Oil & Gas, a Texas-based subsidiary of Scottish engineering firm Weir Group Plc, for $405 million in cash. Weir Oil & Gas produces a full line of pumps, "flow iron" (pipeline products), consumable parts, wellhead, and pressure control products. These are products that are serviced by global network of service centers.
Caterpillar — which operates an iron casting subsidiary as well as manufacturing construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives — will be absorbing more than 40 Weir Oil & Gas manufacturing and services locations and approximately 2,000 employees.
Analysts called the deal a good one for each party, allowing Weir to exit a business sector that has brought it diminishing returns, and helping Caterpillar to build up its oil-and-gas pumps business, though the current state of the North American economy may forestall any near-term growth in demand from onshore oil-and-gas drilling operations.
The acquisition requires approval by Weir shareholders and is subject to review by various regulatory authorities, as well as customary closing conditions.
"Combining Weir Oil & Gas's established pressure pumping and pressure control portfolio with Cat's engines and transmissions enables us to create additional value for customers," stated Joe Creed, vice president of Caterpillar's Oil & Gas and Marine Division. "This acquisition will expand our offerings to one of the broadest product lines in the well service industry."
Weir Group CEO Jon Stanton said the sale "will enable Weir Oil & Gas to continue to flourish, ensuring the business remains at the forefront of innovation and customer service in the future."