Shares in the minerals, oil & gas and industrial group popped nearly 10% on the news, adding to a solid run over the past year which has seen the share price more than double from a low of 442 pence to 1041 pence this morning. The company also announced the acquisition of Malaysia based Linatex for £138 million.
The company is due to release its interim results for the six months ended 2 July 2010 on 3 August 2010, but this morning confirmed that trading for the 9 weeks to 4 June was ‘stronger than expected’.
Weir Group underlined the positive update with a few statistics, including a 25% increase in order input for the 22 weeks to 4 June 2010, compared to the corresponding period in 2009, and further reported that it had continued to benefit from favourable foreign exchange movements.
The company expects to post first half profit before intangibles amortisation and tax of around £140m. Looking ahead to the second half of the 2010, Weir Group expects profit to be ‘significantly ahead’ in constant currency terms compared to H2 2009.
In a separate announcement, the FTSE 250 member announced the acquisition of Linatex, a manufacturer of wear-resistant rubber products to the mining and aggregates industries, for US$200 million (£138 million). The acquisition of Kuala Lumpur based Linatex will boost Weir Group’s exposure in emerging markets and will also give the UK based company the opportunity to increase its presence in Canada’s oil sands market.
Weir Group is paying US$172.5 million in cash on completion of the deal and will assume US$27.5 million in net debt. The acquisition is expected to be accretive from 2011.
“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 company added.
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