Weir Minerals has signaled its intent to expand its product portfolio, as the company announced the acquisition of Trio Engineered Products.
Trio, a Chinese-American manufacturer of crushing and separation equipment for the mining and aggregates markets, has been purchased by Weir for US$ 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 US$ 10 million over a two-year period.
Weir is best known for providing pumping equipment to the mining mill circuit, which separates rock from ore. The acquisition of Trio will build upon Weir’s recent entry into the adjacent comminution segment of the mill circuit.
According to the company, the 100% acquisition of Trio will enable 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, as well as 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% of Trio revenues in 2013).
Trio is based in Shanghai, China, where it has two manufacturing plants. The company also has facilities in the US. In 2013, 31% of revenues were generated in North America, primarily in the growing aggregates sector. 25% of revenues were in China, mainly serving the domestic mining industry. The balance was broadly spread across Australia, South America, Africa and Europe. In 2014, Trio is expected to generate revenues of US$ 120 million with operating profit margins broadly in-line with Weir’s Minerals division.
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.
Keith Cochrane, CEO of the Weir Group, said: "This agreement will allow Weir Minerals to build upon its successful comminution strategy. We’ll use our Group’s unrivalled global capability to promote Trio’s range of complementary products, extending our addressable market and offering our mining customers a wider range of highly engineered equipment and services. Trio’s established manufacturing capability and its scale and presence in aggregates markets also provides a further platform for growth."
Mike Burke, CEO of Trio, said: "This agreement is strategically compelling for Trio, allowing the Company to leverage Weir’s market-leading service centre network to accelerate growth and better serve our customers’ aftermarket needs on a truly global basis."
Adapted from press release by Sam Dodson
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