Weir to buy Malaysia-based Linatex for US$200m
Weir to buy Malaysia-based Linatex for US$200m
(£138m)
The Weir Group PLC ("Weir") has agreed to acquire the Linatex
group of companies ("Linatex"), a global provider of wear-resistant
products to the mining and sand & aggregates industries, based
in Kuala Lumpur, Malaysia. A separate trading update has also been
issued today regarding trading in respect of the 22 weeks ended 4
June 2010.
The consideration will be US$172.5m (£119.0m) payable in cash on
completion and funded from existing bank facilities. In addition
Weir anticipates assuming approximately US$27.5m (£19.0m) of net
indebtedness and similar liabilities. Completion is conditional on
regulatory approvals and, subject to such approvals, is expected to
take place in the third quarter of 2010. The acquisition is
expected to be accretive from 2011 for Weir and its returns are
expected to exceed Weir's cost of capital from the second full year
of ownership.
The acquisition is in line with Weir's strategy to grow its
global capability, expand its emerging market footprint and further
strengthen its aftermarket presence. The board of Weir believes
that the acquisition will benefit the Group through:
- the addition both of the renowned Linatex brand and products
that are strongly complementary to Weir's existing offering in
minerals processing;
- enhanced global reach, Linatex having a geographic footprint
well-aligned to Weir, together with an established emerging market
base served from core manufacturing facilities in Malaysia and
China;
- significant potential for expansion in the Canadian oil sands
market through newly developed Linatex equipment, adding to Weir's
existing presence;
- leveraging Weir Minerals' global sales network to sell
Linatex's market-leading rubber products which are highly
complementary to Weir's pumps, valves and cyclones, and offer many
advantages over traditional metal linings.
Commenting on the transaction, Weir's chief executive, Keith
Cochrane, said:
"The acquisition of Linatex creates great opportunities for our
Minerals division. By combining Weir's expertise in pumps, valves
and cyclones with Linatex's renowned rubber products and branding,
we will have a highly complementary and competitive offering to
satisfy our customers' demand for leading-edge products and
service.
"Linatex's established manufacturing capability, particularly in
Malaysia and China, and its extensive customer network, provides an
excellent platform for growth. We welcome Linatex management and
employees to the enlarged group and look forward to a successful
future together."
Neil Macleod, group managing director of Linatex added:
"We are delighted that Linatex is joining a group with the same
focus on high growth sectors in fast developing markets. There is
great potential to enhance the overall offering to customers and
thereby also create opportunity for employees and the continuation
of the long tradition of the Linatex brand."
A conference call for analysts and investors will be
held at 8 a.m. (UK time) on Monday 14th June to discuss
this statement and the trading update statement also issued
today.
For dial-in details please contact Maitland on +44 (0)
207 379 5151
Contact details:
The Weir Group PLC
Helen Walker, Public Relations Manager Tel. 0141 308
3739 (Mobile: 07789 032296)
Maitland Tel. 020 7379 5151
Suzanne Bartch (Mobile: 07769 710 335)
Rowan Brown (Mobile: 07834 434 662)
Note to Editors: Print quality images are
available to download at http://www.newscast.co.uk
1 Exchange rate of £1 = US$ 1.45 at closing in London
on 11 June 2010
Further background information
Weir intends to acquire 100% of the issued share capital of
Linatex Consolidated Holdings Limited, a company registered in the
British Virgin Islands. Linatex has since 2005 been owned by a fund
controlled by Navis Capital, a private equity group headquartered
in Kuala Lumpur.
Linatex provides rubber sheet, process equipment (including
pumps, valves and cyclones), hoses, moulded products, screen media
and related services, principally for highly-abrasive mining and
sand and gravel applications
Headquartered in Kuala Lumpur, Linatex's operations comprise
core manufacturing facilities in Batu Caves, Kuala Lumpur and Wuxi,
China. Regional manufacturing centres are located in (i) Perth and
Townsville, Australia; (ii) Alrode, South Africa; (iii) Yateley,
UK; (iv) San Bernardo, Chile; and (v) Gallatin, Windfall, Luck and
St. Croix Falls, US. There are two service centres in Canada, one
in South Africa and four in Australia. In total, Linatex employs
approximately 1,000 people. Additional detail is available from the
company's website: www.linatex.com.
For the year to 31 December 2009, Linatex generated sales of
US$114.8m (2008: US$156.6m) and adjusted earnings before interest,
tax, depreciation and amortisation (EBITDA) of US$13.9m (2008:
$19.7m) under IFRS. As at 31 December 2009, gross assets were
US$115.4m. In the unaudited management accounts for the four months
to April 2010, both sales and EBITDA are ahead of the prior
year. Profit before taxation (after interest, depreciation,
amortisation and various non-recurring items) in 2009 was $1.0m
(2008: $3.2m).
Cost saving initiatives envisaged by Weir are, within the second
year of ownership, expected to give rise to incremental annual
profits of $5-$10m.
END
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