The FTSE 250 featured Weir Group (LON: Weir) on List 250, listing the biggest profits of the UK’s large cap on Monday morning. This was featured on Caterpillar Inc (NYSE: CAT), news that it successfully completed its oil and gas arm sales.
The sale took place for the agreed £314 million and was part of Weir Group’s broader strategic shift to premium mining technology pure play.
Net revenue from sales is expected to extend to reduced group leverage as Net Debt/EBITDA reported 1.9x net debt/EBITDA on June 30, 2020. Weir added that the transaction will deliver US tax benefits of $70 million over the medium term.
The company added that the transaction will be subject to shareholder approval, but its completion is expected by the end of 2020.
In the future, the company hopes to utilize the low-carbon society and the new mining technology needed for this. It aims to build the mining supply chain in a mission-critical position, from extraction to concentration and tailing management.
Speaking about the transaction and the strategic changes that followed, Weir Group CEO Jon Stanton commented.
“We are pleased to have reached this agreement that provides the best home for the oil and gas sector and maximizes the value of our stakeholders. In addition to previous sales of the flow control division and acquisition of ESCO, this is a major milestone in transforming the group into a focused, premium mining technology business.”
“That means Weir is ideally positioned to benefit from long-term structural demographic trends and climate change actions that increase the demand for critical metals that must be produced more sustainably and efficiently. This requires innovative engineering and close customer partnerships that define Weir, which is why we are so excited about the future.”
Following the news, Weir shares increased by 18.32% or 234.50p. The company currently has an AP/E ratio of 14.56 and dividend yield is 1.09%.
The MarketBeat community currently has a “low-performance” stance of 58.75% on its stock. And before today’s abolition, the analyst stock had a 12-month target price of 1,263p.
