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Ambitious plans for takeover are at a standstill

WEIR Group chairman Charles Berry has confirmed the firm is looking at a range of deals but conceded there has been no movement on its ambitious plan to create a £9 billion engineering giant by taking over Finnish rival Metso.

strategy: Weir chief executive Keith Cochrane confirmed the company is eyeing deals but has not moved forward on plan to take over Finland's Metso
strategy: Weir chief executive Keith Cochrane confirmed the company is eyeing deals but has not moved forward on plan to take over Finland's Metso

Mr Berry yesterday indicated there had been no change in the potential Metso transaction since Weir proposed an all share merger which was then knocked back by the Metso board last month.

Speaking at the company's annual general meeting in Glasgow he gave no suggestion as to whether Weir would make a further offer and said: "There is no certainty we will revise the terms of our proposal."

After the meeting Mr Berry went on to say: "Nothing has changed since April 16. We see compelling logic in the combination.

"We made an indicative all share merger proposal. The Metso board considered and declined it and that is it."

However he did state Weir is considering a range of possible acquisition targets across the sectors it works in.

He said: "There is always a suite of opportunities we are looking at. We have a range of options, a range of sizes across all the divisions.

"When Weir looks at these things it is very disciplined. We have the criteria we want to meet from a strategic, operating and financial standpoint and these always apply.

"The company is well placed in three carefully selected sectors - minerals, oil and gas and power. There are organic opportunities in all three and we can supplement them by [merger and acquisition]."

All resolutions at the AGM were passed with company's remuneration report, policy and long term incentive plan attracting support in excess of 99%.

Earlier in the day chief executive Keith Cochrane told analysts the proposal put to Metso did not preclude Weir from pursuing further transactions.

He said: "We are looking at large and small opportunities across all divisions. So minerals, oil and gas and indeed, power and industrial.

"So we continue to look, as we have always done, on a broad front. These are good markets to be in and it is all about identifying the right opportunities for us that extend our position, but doing so at the right price.

"There are some interesting opportunities out there and in the main I'd have to say that price expectations of sellers are tending to be pretty sensible"

In an update on first quarter trading, covering the 13 weeks to April 4, Weir said it had seen more activity in the oil and gas and the power divisions but minerals remained weak.Although group original equipment orders dipped 2% the aftermarket was up by 13% against the prior year.

In minerals orders were down by 7% as a result of a 27% fall in original equipment orders but Weir said it was maintaining its full-year guidance.

Oil and gas orders were slightly ahead of expectations and were up 33%.

Although the first quarter of 2013 was described as the low point of the upstream cycle it is believed to have been Weir's best opening to a year in that sector since 2011.

North America and the Middle East were highlighted as particularly strong growth areas.

There was a 5% uptick in orders in the power and industrial arm with Weir highlighting better prospects in the North American hydro sector.

Weir left its annual forecasts unchanged in spite of some analyst speculation there may have been an uplift on the back of increasing activity in the US shale sector.

It said: "We expect good constant currency revenue and profit growth with margins broadly in line with 2013 levels, although reported results will be impacted by adverse foreign currency movements."

Shares in Weir Group, which have risen by more than 20% this year, closed down 56p, or 2%, at 2634p.

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