The revolutionary engineering solutions firm, Weir group has confirmed that it is selling its oil and gas division to an American Fortune 100 corporation, Caterpillar, for 405 million dollars.
However, the agreement is expected to complete by the end of the year and will further boost Weir Group’s balance sheet, which will draw further investments.
The transaction also provides a cash tax gain of USD 70 million, which decreases the group’s control in net profits.
The company also released its budget revealing that its gross assets are worth $747 million at the end of 30th June.
The agreement includes the North American operations of the company consisting of its pressure pumping and pressure management equipment.
Weir’s CEO, Jon Stanton, said the agreement is a significant achievement for the firm, allowing the business to become a top-notch technology firm.
The CEO, while talking to the media, further said that when the decision of selling the oil and gas division was made, the company had 2 objectives in mind.
The first one was to find a good home for the business whereas the other one was to maximize the value for stakeholders.
The Caterpillar deal satisfied both the objectives as Caterpillar is a strong strategic buyer and Jon is confident that with the help of their management, his people and technology would flourish.
The CEO also thanked the Weir team along with the advisors and claimed that without their help, the deal could not have taken place. He appreciated their efforts as it was not an easy task.
The company has stated that circulars containing all the details of the transaction would be forwarded to the shareholders soon.
Jon Stanton further stated that the company has been performing well and highlighted some of its achievements.
Jon continued by saying that the company is biased towards high growth and it has the best-in-class recurring revenue model as recurring revenue represents 80% of sales.
He also claims to deliver a 500 basis point improvement in ESCO margins since acquisition in 2016 with resilient earnings throughout the years.