After its failed bid for Finland’s Metso earlier this year, the Glasgow-based Weir Group is to acquire Chinese manufacturer Trio to increase its share of the mining market.
The engineering group, which makes valves and pumping equipment for mining businesses and oil and gas companies, will buy the Shanghai-based company for £138 million from the Kuala Lumpur private-equity firm Navis Capital.
Thomas Rands, an analyst at the Investec investment group, said the deal is a “sensibly valued bolt-on”, adding that it will increase Weir’s ability to compete against market leader Metso.
“Unfortunately, the small positive impact of this deal may be lost against the significant headwinds of a falling oil price, a lower US gas price and further pricing pressure from the mining majors.”
Trio designs and manufactures crushers and grinders for the minerals market; it has manufacturing facilities in Shanghai and the USA. In 2013, it generated 31% of its revenues from North America and 25% from China.
The acquisition will help to increase Weir’s share of the market for comminution equipment — machinery that crushes rocks. Weir first moved into this sector in April 2013, when it signed a deal for high-pressure grinding-roller technology from Germany’s KHD Humboldt Wedag.
Weir chief executive Keith Cochrane said: “We’ll use our group’s unrivalled global capability to promote Trio’s range of complementary products and offer our mining customers a wider range of highly engineered equipment and services. Trio’s established manufacturing capability, along with its scale and presence in aggregates markets, also provides a further platform for growth.”