The purchase, which doubles Weir's exposure to pump markets, will be mostly financed by a one- for-four rights issue at 252p to raise pounds 96m. Weir shares closed 2p up at 304p.
Sir Ronald Garrick, chief executive, said the acquisition of EnviroTech, sold by Baker Hughes, the US oil services group, would turn Weir's pump division into a truly international business able to offer 'one-stop' marketing in key areas across the world.
Although there is little product overlap, Sir Ronald said that he expected to see cost savings 'across the piece'.
He said EnviroTech would enhance earnings in its first full year and represented a growth opportunity for the group. Following the acquisition and rights issue, Weir would have a strong balance sheet with only modest gearing, if any, and be well positioned for future opportunities.
Operations in Australia and Canada would be combined at the administrative level. In time pump production at Weir's UK factories may be moved to EnviroTech's overseas locations, where customers could be supplied more easily.
News of the purchase accompanied half-year results from Weir showing a rise in pre-tax profits from pounds 16.8m to pounds 18.5m, largely due to the absence of a pounds 2.4m exceptional charge for redundancies in 1993 partly offset by lower net interest income. The interim dividend is 2.06p, a rise of 7 per cent.
Sir Ronald said that trading remained 'difficult'. Despite many market opportunities Weir was not prepared to take business at inadequate margins while demand for spares, on which Weir makes good profits, was running 10 per cent below the levels of a year ago.
EnviroTech is based in Salt Lake City, with plants in Sacramento and St Louis. It has widespread overseas operations.
In the year to 30 September, EnviroTech made pre-tax profits of dollars 21.7m on sales of dollars 220.5m and net assets on that date were dollars 98.3m.
EnviroTech makes specialist pumps for handling abrasive and corroding fluids, whereas Weir pumps have traditionally been aimed at clear water uses. About 40 per cent of sales are in spare parts and services.
Weir's pump activities account for 40 per cent of the group's turnover. Combined pump turnover will jump from pounds 180m to pounds 330m with the inclusion of EnviroTech.
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