Weir has fallen back following reports the Scottish engineering group could be on the acquisition trail again.
The pumps specialist abandoned a €4.5bn attempt to buy Finnish group Metsuo earlier this year, after the target argued the offer undervalued its business.
Now Weir is said to have turned its attention to Finnish mining technology group Outotec, reportedly weighing up an offer of €12 a share which would value it at around €2bn. Weir did not comment but Outotec said it had not been approached or received a bid. It added:
Should Outotec receive these types of proposals the board of directors would evaluate them thoroughly.
Analysts at Liberum said:
A €12 bid, assuming the deal is 60% financed through debt (taking combined net debt/ebitda to 2 times), and assuming 3% of synergies in 2015, would be 0% earnings enhancing to 2015 numbers, on our quick read.
Some will question the logic in building the minerals business (53% of revenues) further, especially given the current environment and the current strength in US shale, although there are some signs that the mining environment may be flattening (Atlas Copco comments last week).
Weir is currently 21p lower at £27.27.
