Engineering giant Weir Group today announced it has acquired a leading oil and gas technology provider in Asia for $114m (£89m).
Weir, which has a strong presence in North America and the Middle East, said the purchase of KOP Surface Products expands and complements its portfolio while further strengthening its position to benefit from the recovery in the oil and gas sector.
KOP designs and manufactures wellheads, valves and other systems and services for the oil and gas industry. The Singapore-headquartered firm has a leading market position in Asia and an emerging business in the Middle East, employing around 450 people overall.
The Scottish firm acquired KOP from Norwegian-listed oilfield services investor Akastor ASA.
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KOP generated an average of $117m in annual revenues in the three years ending December 2016 and is expected to generate revenues of $46m in 2017.
Philip Barker, partner and head of industrials at Cavendish Corporate Finance said the acquisition marks Weir's bet on the recovery of the oil market.
"Weir Group was no stranger to the oil price collapse in 2014 that saw weak demand and low prices, seeing a 21 per cent drop in revenues in 2015. As oil prices are beginning to somewhat recover, we can assume that the group has been patiently waiting to make such a strategic acquisition that will help to increase their assets and build their portfolio in a cost effective way over the long term," Barket said.
With the overall market stabilising and upstream activity in Asia showing recent signs of revival, this acquisition firmly cements Weir Group’s position as global leaders in manufacturing for the oil and gas sector.
"KOP is a great company with a strong management team that we have admired for some time. It is a natural fit for Weir and extends our range of wellhead and other pressure control solutions," said Weir Group chief executive Jon Stanton.
"KOP's position in Asia also complements Weir's leading presence in North America and the Middle East and means our group is in an even stronger position to benefit as oil and gas markets recover in the future."
The deal is expected to complete in the third quarter of 2017.
Weir's share price fell more than one per cent at the market open. At the time of publishing, its FTSE 250-listed shares were down 0.79 per cent at 1,886p.