Weir turns predator as sector shakes out

WEIR GROUP, the Scottish pumps and valves company, returned to the offensive in the consolidation of the engineering sector yesterday when it said it had pounds 250m in facilities for acquisitions.

The group revealed the size of the war chest, equivalent to nearly half the group's market worth, just three weeks after beating off a pounds 620m takeover bid by Flowserve, a smaller US competitor. On 2 March, Flowserve dropped its 300p-a-share bid after Weir said it "failed by a wide margin to reflect the company's value".

Weir said the size of its war chest indicated it was now in a position to be a predator rather than a target.

Sir Ron Garrick, chairman and chief executive, said Tuesday's deal between ABB and Alstom, creating the world's biggest power-generating company, suggested more mergers and acquisitions were likely.

Like its rivals, Weir has been forced to look for alternative sources of growth because of the slow-down in the oil and power sectors. Yesterday it predicted only slight growth in profits, saying it would be a "difficult year for the pump business". Alternative plans include growing by a series of "bolt-on" acquisitions.

Duncan Whyte, who in June will join from Scottish Power to be chief executive, plans to develop the group's after-sale service business, where profit margins are higher than in Weir's core business.

The falling demand for core products was offset by increases in other areas. Sir Ron said he expected further defence orders, including contracts to supply three Astute hunter-killer submarines with machinery for launching Tomahawk cruise missiles, of the kind being used in Kosovo.

The City marked the shares down in spite of a 6.5 per cent rise in underlying pre-tax profits to pounds 64m - ahead of expectations. The shares fell 4 per cent to 259p.

Analysts blamed the fall on profit-taking after the recent strong run in engineering stocks. Weir is on a historic multiple of 11, broadly in line with its peers. But a pick-up in orders is expected in 2000. Greig Middleton recommends a buy on a three-year view.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
musicOfficial chart could be moved to accommodate Friday international release day
Sport
Wes Brown is sent-off
football
News
i100
Sport
Italy celebrate scoring their second try
six nations
Sport
Glenn Murray celebrates scoring against West Ham
footballWest Ham 1 Crystal Palace 3
Arts and Entertainment
Drake continues to tease ahead of the release of his new album
music
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower