Weir drops takeover of Finnish rival Metso after new bid snubbed

Weir Group has abandoned plans to create a £9bn engineering giant after Finnish rival Metso rejected a takeover offer for the second time in two months.

Glasgow-based Weir, led by Keith Cochrane, went back to Helsinki-listed engineering firm Metso on May 20 with an improved proposal on its earlier approach in March.

It said the all-share deal represented a 13 per cent hike on the previous proposals. It valued Metso’s shares at 30.49 euros (£24.77) each, making the company worth about £3.7bn.

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However, Weir - whose market value is about £5.5bn - said the Metso board “did not engage” on this second proposal and that the Finnish company yesterday rejected it as significantly undervaluing the business.

The group said: “Weir believes it made a compelling proposal but remains financially disciplined and therefore does not intend to pursue this opportunity further at this time.”

FTSE 100-listed Weir has more than 15,000 employees across 70 countries. It sits in a crowded mid-sized industrial sector which industry insiders say is ripe for consolidation in order to provide a wider range, and a greater scale, of equipment and services to cost-conscious clients. Shares slipped 2 per cent on yesterday’s announcement.

The firm, which is a supplier of pumps and valves to the oil and gas industry, offered 0.95 Weir shares for each Metso share. It said the offer represented a 34 per cent premium to Metso’s undisturbed share price prior to its initial proposal on March 26.

Weir added that the combined group would have also been able to make savings of at least £150m a year once the merger had been completed.

Metso, which employs 16,000 staff in 50 countries, provides engineering services to the mining, oil and gas and construction industries.

Weir’s European minerals division is headquartered at Todmorden, West Yorkshire. It cut 47 jobs at the site last year in spite of investing in plant and machinery.