WEIR Weir Group Plc

-- Weir Group has agreed to sell its Oil & Gas division to Caterpillar for $405 million.

-- The FTSE 250 group is seeking to focus on its mining-technology business and will use the money to reduce leverage.

-- Caterpillar said the deal, which includes 40 locations and around 2,000 employees, will enable it to create additional value.

By Jaime Llinares Taboada

Shares of Weir Group PLC jumped Monday in early trading, after the company said it agreed to sell its Oil & Gas division to Caterpillar Inc. for $405 million in cash.

The FTSE 250 engineering company said the deal follows its strategy of becoming a pure mining-technology company. The proceeds will be used to reduce leverage and the sale will provide earnings stability, Weir Group said.

"Alongside the previous sale of the flow control division and the acquisition of ESCO, it is a major milestone in transforming the group into a focused, premium mining technology business," said Chief Executive Jon Stanton.

In February, the Scotland-based company said it was looking to "maximize value from the Oil & Gas division," pointing to shorter cycles and higher levels of volatility, as well as a challenging market backdrop. Weir Oil & Gas revenue fell 25% in 2019, and plunged 48% in the first half of 2020 from a year earlier.

Caterpillar, a provider of equipment to mining and building companies that is listed on the New York Stock Exchange, said the deal will enable it to create additional value for customers. "This acquisition is consistent with Caterpillar's strategy to invest for long-term, profitable growth through operational excellence, expanded offerings and services," it said.

Weir Oil & Gas produces a full line of pumps, flow iron, consumable parts, wellhead and pressure control products. The transaction includes 40 manufacturing and services locations and around 2,000 employees, Caterpillar said.

The acquisition is subject to Weir shareholders' approval, review by various regulatory authorities and customary closing conditions.

Shares in Weir Group at 0743 GMT were up 14% at 1,456.0 pence.

Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT

(END) Dow Jones Newswires

October 05, 2020 04:20 ET (08:20 GMT)

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