Scottish industrial giant Weir has agreed the £275 million sale of its Flow Control division.
Shares in the group edged ahead following the announcement of the disposal of the highly engineered industrial pumps and valves unit to private equity group, First Reserve.
The move comes 10 months after Glasgow-based Weir said it intended offloading the division.
“We are pleased to announce the sale of Flow Control to First Reserve,” Weir Group CEO Jon Stanton said.
“This is a high-quality business with great people and I’d like to thank the team for their long-standing contribution to the group and dedication throughout the sale process.
“The decision to sell Flow Control is part of Weir’s recent portfolio transformation which focuses the group on where we can maximise long-term value – building on our strong global leadership positions in mining and upstream oil and gas markets.”
The transaction is subject to customary regulatory approvals.
Post-transfer, Weir will continue to retain the UK defined benefit pension liabilities of Flow Control, a fund to which it will make a £4m contribution.
In addition, Weir’s US subsidiaries will retain Flow Control’s legacy asbestos exposure together with corresponding insurance.
Weir said the net proceeds of the sale will be used for general corporate purposes including reducing leverage and funding future investment.
Jeff Quake and Neil Hartley, managing directors of First Reserve, said: “First Reserve has deep historical experience creating value for our investors in the flow control space, and we are pleased to partner with Weir in this carve-out transaction.
“In our view, Weir Flow Control represents an attractive growth platform in a fragmented sector, with internationally recognised brands driven by recurring high-margin aftermarket parts and services which have proven to be resilient through multiple economic environments.”