The FTSE 250-listed firm is buying KOP, which makes wellheads, valves and other equipment from Norwegian-listed oilfield services investor Akastor ASA.
The firm said the deal will expand and complement its “highly engineered mission-critical equipment” and further strengthen the group’s position to benefit from the oil and gas market recovery.
Weir’s chief executive, Jon Stanton said: “KOP is a great company with a strong management team that we have admired for some time.
“It is a natural fit for Weir and extends our range of wellhead and other pressure control solutions. KOP’s position in Asia also complements Weir’s leading presence in North America and the Middle East.”
Philip Barker, partner and head of industrials at Cavendish Corporate Finance, commented: “Weir Group was no stranger to the oil price collapse in 2014 that saw weak demand and low prices, seeing a 21% drop in revenues in 2015.
“As oil prices are beginning to somewhat recover, we can assume that the Group has been patiently waiting to make such a strategic acquisition that will help to increase their assets and build their portfolio in a cost effective way over the long term. “
He added: “With the overall market stabilising and upstream activity in Asia showing recent signs of revival, this acquisition firmly cements Weir Group’s position as global leaders in manufacturing for the oil and gas sector.”
New shares to be issued for funding
The firm is funding the cash transaction through the issue of new ordinary shares equivalent to approximately 2% of its existing issued capital.
Weir's broker UBS will be placing the new shares, subject to market conditions, over the coming weeks up to the middle of August 2017 at a price determined by reference to average prices of its ordinary shares over the period.
In reaction to the dilution, in early afternoon trading, Wier shares were 1.29%, or 55p lower at 1,846p.
The firm also provided a brief update on current trading with the acquisition announcement, saying order input trends in April and May were in line with expectations and the group's full year guidance for 2017 is unchanged.
It added: “As previously indicated, and reflecting these order trends, profits are expected to be weighted to the second half.”
-- Adds analyst comment, updates share price --