Acquisition of Delta Industrial Valves Inc.
Acquisition of Delta Industrial Valves: Weir Minerals expands valve offering
The Weir Group PLC ("Weir") has agreed to acquire Delta Industrial Valves Inc. ("Delta" or "the Company"), a leading US-based manufacturer of knife gate valves for the mining, oil sands and other industrial markets, for an enterprise value of up to US$47 million. Based in Niles, Michigan, Delta employs approximately 70 people and generated EBITDA[1] of approximately US$6.2 million over the last twelve months.
Initial consideration of US$37 million will be payable on completion of the acquisition, US$21m in cash (funded from existing bank facilities) and US$16m in new equity[2], enabling the owners of Delta to share in the future benefits of the combination. Up to a further US$10m in cash will be paid over the next 18 months, contingent upon the business meeting certain profit growth targets.
The acquisition extends Weir Minerals' leading presence in mining and oil sands markets by expanding the division's portfolio of valve products, particularly knife-gate valves, for use in the transportation of slurry. The transaction will be immediately earnings accretive, and post-tax returns (before integration costs) are anticipated to exceed Weir's cost of capital in the first full year of ownership. Completion of the acquisition is expected to occur within the next few days.
Keith Cochrane, Chief Executive of the Weir Group, said:
"Weir is a global leader in process critical products in the mining and oil sands markets and the acquisition of Delta further strengthens our comprehensive offering to customers. Delta's strong brand and reputation, together with Weir's global capability, mean we will be able to offer our customers new ways to increase efficiency at a time when the industry is focused on reducing costs and increasing productivity."
Mark Johnson, Vice-President of Delta, said:
"We are delighted that Delta will be joining one of the world's leading engineering businesses. Delta will be able to take advantage of Weir's presence in more than 70 countries, bringing our valves technology to customers all over the world. We see significant opportunities ahead in what remain long-term growth markets."
About The Weir Group PLC
Founded in 1871, The Weir Group PLC is based in Glasgow, Scotland and is one of the world's leading engineering businesses. Weir designs, manufactures and services innovative solutions which make our minerals, oil and gas and power customers more efficient. This is recognised in the global leadership positions we have developed in our core markets.
The Group aims to be a partner of choice to our customers with a worldwide network of around 200 manufacturing facilities and service centres. The business has a presence in more than 70 countries, with over 15,000 people around the world working in three divisions: Minerals; Oil & Gas; and Power & Industrial.
Annual revenues were more than £2.4 billion in 2014, of which almost two thirds came from the provision of services and aftermarket support.
About Delta Industrial Valves Inc.
Founded in 1987, Delta manufactures a range of ASME class 150, 300 and 600 knife gate valves for the mining, oil sands and other industrial markets in North America, with a growing international presence. Delta's products are capable of cutting, shearing, and closing against solids while still producing a zero leakage tight shut-off, and include the world's only Safety Integrity Level certified knife gate valve series.
Delta operates from an 82,000 square foot facility in Niles, Michigan.
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[1] Earnings before interest, tax, depreciation and amortisation ("EBITDA") for the twelve months ended 30 April 2015, adjusted for certain non-recurring items.
[2] The amount of new equity issued will be less than 0.3% of The Weir Group PLC's issued share capital, based on an issuance of 593,934 shares at a valuation of 1,726p (the average closing price between 26 June and 2 July 2015) and a GBP:USD exchange rate of 1.5606 as at 2 July 2015.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: The Weir Group PLC via Globenewswire
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