The Weir Group PLC has entered into an agreement to acquire Trio Engineered Products, a Chinese-American manufacturer of crushing and separation equipment for the mining and aggregates markets, for an enterprise value of $220 million.
The acquisition will be funded from existing bank facilities and will be immediately earnings accretive with post tax returns (before integration costs) expected to exceed Weir’s cost of capital in the first full year of ownership. Integration costs are expected to total $10 million over a two-year period.
The acquisition of Trio will build upon Weir’s recent successful entry into the adjacent comminution segment of the mill circuit. The acquisition enables Weir to:
- Provide a more complete product and service offering to existing mining customers;
- Leverage Trio’s cost effective manufacturing platform.
- Utilise Weir Minerals’ global platform and relationships across mining markets to accelerate Trio’s original equipment revenue growth; and capture a greater proportion of the aftermarket opportunity from the installed base of Trio equipment. Trio has limited service presence outside of China.
- Cross-sell Weir’s product range in sand and aggregates markets through Trio’s well-established sales channels in North America and China (sand and aggregate markets accounted for 56 percent of Trio revenues in 2013).
Trio is based in Shanghai, China, where it has two manufacturing plants. The company also has facilities in the United States. In 2013, 31 percent of revenues were generated in North America, primarily in the growing aggregates sector; 25 percent were in China, mainly serving the domestic mining industry; the balance were broadly spread across Australia, South America, Africa and Europe.
In 2014, Trio is expected to generate revenues of $120 million with operating profit margins broadly in-line with Weir’s Minerals division.
Trio is being acquired from majority owner Navis Capital and the company's management team. Trio's three founders have agreed to remain with the company following acquisition. Completion of the acquisition is subject to the fulfilment of certain conditions and is anticipated to take place before the end of October 2014