Weir centres on US shale gas in Mathena deal

ENGINEER Weir Group yesterday strengthened its position in the US shale gas sector as it acquired Mathena for up to $385m (£236m).

Oklahoma-based Mathena, which manufactures pressure control rental equipment including hydraulic chokes used in fracking, marks a key move for Weir to broaden its operations in the US shale gas drilling market.

FTSE 100-listed Weir will pay an initial payment of $240m, with a deferred consideration of $145m payable over two years contingent on meeting profit targets.

Based on its fourth quarter estimates, Mathena is forecast to deliver annualised earnings of $49m.

Weir Group chief executive Keith Cochrane yesterday said that the acquisition was a “close strategic fit” with Weir’s existing pressure control business Weir Seaboard.

“The business has strong growth potential and increases our exposure to shale oil and gas, markets with attractive long term structural growth prospects,” Cochrane said yesterday.

“Mathena is a well-regarded business in the US upstream oil and gas markets, with a strong management team and market share in the pressure control drilling markets.”

Analysts from Investec cheered the deal. “This acquisition fits in nicely with Weir Seaboard and diversifies oil & gas revenues away from the pressure pumping market,” they said in a note.

The markets reacted well to the acquisition, with Weir Group one of the biggest blue chip risers yesterday, closing up 2.81 per cent at 1,863p.