Weir turns predator as sector shakes out
Thursday 25 March 1999
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.
- 1 Forget 'The Dress': Here are five of the biggest news stories you might have missed
- 2 The black and blue dress: Makers considering a white and gold version
- 3 PornHub turns masturbation into energy in bid to save the planet
- 4 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
- 5 MH370: 'Putin ordered plane to be flown to Kazakhstan space port,' conspiracy theory claims
Boris Nemtsov shot dead: Outspoken Putin critic who had expressed fears for his life is killed near the Kremlin
PornHub turns masturbation into energy in bid to save the planet
Ukraine crisis: Top Chinese diplomat backs Putin, says West should 'abandon zero-sum mentality'
White and gold or blue and black – what colour is the dress? An eyewitness gives a definitive answer
Saudi Muslim cleric claims the Earth is 'stationary' and the sun rotates around it
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
This is what it's like to be dead, according to a guy who died for a bit
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...