Weir Group Acquires Novatech LLC
GLASGOW, Scotland, Jan. 25, 2012 /PRNewswire/ — The Weir Group PLC (“Weir”) has agreed to acquire Novatech LLC, a US manufacturer of well service pump valves and valve seats for upstream oil and gas applications, for US$176m (113m pounds Sterling) in cash.
The consideration will be funded from existing bank facilities. The acquisition is in line with Weir’s acquisition criteria and is expected to be immediately earnings accretive with post tax returns expected to exceed Weir’s cost of capital within the first full year of ownership. Subject to US regulatory approvals, completion of the acquisition is expected in February 2012.
Based in Dallas, Texas, Novatech, a family-owned business, produces a wide variety of proprietary valves and valve seats for high pressure applications such as frac, cement and mud pumps used in unconventional upstream oil and gas operations. The business is well known to Weir, being a long standing local supplier to Weir SPM. Novatech achieved proforma revenues and EBITDA(2) of US$61.6m and US$25.2m respectively(3) for the most recent fiscal year ending 30 September 2011, with associated annual revenue growth of 88%. Positive trends continued in the final quarter of calendar 2011. Approximately 90% of revenues are generated from aftermarket demand.
Novatech’s range of durable valves expands Weir’s offering in the fast-growing frac pump consumables markets and significantly enhances its frac pump aftermarket portfolio. The acquisition enables Weir to:
- Offer an enhanced package of aftermarket pump expendables to oil and gas service companies;
- Utilise its substantial footprint to provide broader sales opportunities and field service for Novatech products;
- Open international markets to Novatech’s offering; and,
- Enhance productivity through application of Weir’s lean processes in production, supply chain and front end.
Commenting on the acquisition, Weir Chief Executive, Keith Cochrane, said: “Novatech is a respected brand in the US upstream oil and gas markets, with strong market share in the frac consumables market. This deal enables Weir to broaden our aftermarket expendable product portfolio in this fast-growing sector, where increasing operating intensities require equipment and components to be more regularly replaced and serviced. With the recent acquisition of Seaboard, this strengthens further Weir’s presence in the North American unconventional oil and gas markets and builds a larger upstream product range to offer the developing international shale markets.”
President, Chairman and CEO of Novatech, Starr L. Pitzer Jr, said: “We have worked with Weir’s upstream business as a supplier for a number of years and have come to know the company well and admire the way they operate. Through joining the Group, I believe that Weir’s global sales and service networks will enable the business to grow, not only in North America, but also by taking Novatech products to international customers.”
A presentation containing further information on the acquisition is available from www.weir.co.uk. As previously indicated, Weir will announce its 2011 preliminary results on 29 February 2012.
Contact details: The Weir Group PLC Vicky Ferrier, Head of IR and Tel: +44 (0) 141 Communications 302 3782 Jonathan Milne, Communications Manager Tel: +44 (0) 141 308 3781 /+44 (0)771 378 9536 The Maitland Consultancy Peter Ogden, Rowan Brown Tel : 020 7379 5151
Note 1: (i) Subject to customary adjustments in respect of actual levels of indebtedness and working capital at closing. In addition, approximately U$4m in deferred consideration relating to tax refunds is expected to be paid in the course of 2012. (ii) Encompasses real estate and other assets used by the business but held outside Novatech LLC. (iii) Exchange rate of 1 pound Sterling = US$1.5601 at closing in London on 24 January 2012. Note 2: Earnings before interest, tax, depreciation and amortisation. Note 3: Proforma unaudited financial information for the fiscal year to 30 September 2011, reflecting inclusion in the transaction of assets used by the business but held outside Novatech LLC.
About Novatech LLC
Novatech was founded in 1970 to provide inertia-friction welding to the energy industry and the automotive aftermarket. In 1983, Novatech pioneered the manufacture of the original inertia welded uni-body valve design for the oilfield service industry. This valve quickly became the industry standard. Today, Novatech manufactures a wide variety of valves and seats, for applications including work-over pumps, high pressure well service fracturing pumps, cementing and mud pumps. The business has 58 employees and operates from a 30,000 sq ft facility in Dallas.
See www.novatechmfg.com for further information.
About The Weir Group PLC
Weir, a FTSE 100 company, is a global provider of engineering solutions to the minerals, oil and gas and power sectors. Our commitment to engineering excellence, research and customer focus extends equipment wear life and operational capability in some of the world’s most challenging environments.
Weir is committed to going where our customers go, with a worldwide network of more than 140 manufacturing facilities and service centres. The business has a presence in more than 70 countries, with 13,000 staff around the world working in our three divisions; Minerals, Oil & Gas and Power & Industrial. Weir’s customer base includes the world’s largest mining houses, major oil services businesses and nuclear and conventional power generation companies.
Annual revenues were more than 1.65 billion pounds in 2010, of which more than half came from the provision of services and aftermarket support. Emerging markets contributed 39% of overall Group revenues.
Weir’s Oil & Gas division is the leading supplier of high pressure pumping equipment to the upstream oil and gas market. The division also produces a range of flow control products targeted at the high pressure applications found in the pressure pumping market. Through the December 2011 acquisition of Seaboard, the division is now a leading supplier of proprietary surface wellhead systems and related services for conventional and unconventional wells. Weir’s Oil and Gas service operations support customers across North America, the Middle East and Europe. The division’s downstream operations manufacture process pumps for use in the hydrocarbon processing industries. In 2010 the division reported revenues of 462m pounds and employed over 3,000 staff.
See www.weir.co.uk for further information.
SOURCE The Weir Group PLC