S&P affirms Weir Group

S&P said it affirmed its BBB-/A-3 long- and short-term issuer credit ratings on the Weir Group plc. The outlook is stable.

Weir Group has announced its intention to acquire American-based manufacturer of ground engaging tools for mining and construction markets ESCO Corp. for a total consideration of $1.051 billion, of which 59% will be cash-financed through additional debt of approximately $190 million and proceeds of the acquisition-related share issuance. The remaining 41% of the purchase price will be covered through ESCO shareholders becoming shareholders of Weir Group after closing.

“The affirmation indicates that, after the acquisition, Weir Group will have a wider range of products and services, which we view as positive. However, this is offset by our negative view of the group's relatively concentrated end-market exposure and dependency on demand from the mining, oil and gas markets (specifically, fracking in North America),” S&P said in a news release.

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