SCOTTISH engineering company Weir Group has insisted it is in a good position to succeed as an independent entity after the collapse of its plan to acquire Finland's Metso led to speculation the Glasgow group is now vulnerable to takeover itself.

Weir said yesterday it had made a second offer for Metso, which valued it at around €4.5 billion (£3.7bn), and had this rejected.

Chief executive Keith Cochrane won plaudits from some Weir investors for resisting the temptation to sweeten the deal further in the face of opposition from Metso investors. Opponents included Solidium, a state-owned investment company with an 11 per cent stake in Metso which indicated that even an increased price would not persuade it.

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But others warned the Scottish pump maker could now be a target for larger rivals such as General Electric or Honeywell.

A Weir spokesman said: "We have a very good track record of creating substantial value for our shareholders as an independent company.

"We believe that puts us in a good position to succeed as an independent company in the future too."

The rejection comes at a time when Weir Group's previous stellar profit growth has been halted by lacklustre activity in the American fracking sector and a cull of spending by mining companies.

Weir said Metso shareholders would have owned around 40 per cent of the combined company, despite its comparatively low stock market value.

The new proposal included a special dividend payment to all shareholders of the combined group of €2.13 per share. The two firms would have made at least £150 million in annual cost savings.

They had potentially complementary positions in the mining and oil and gas sectors, where Weir is particularly strong, while it would also have boosted Weir's relatively small industrial arm.

But Metso chairman Mikael Lilius said: "We believe that Metso has a real opportunity to create significant value for all its shareholders by pursuing its own course and that the proposal from Weir significantly undervalues this opportunity and that a takeover by Weir at these conditions would not be in our shareholders' best interests."

Weir's improved bid of €30.49 per share was made on May 20 and represented a 34 per cent premium to Metso's share price on May 26, the day before the bid was rejected.

Weir's initial approach for Metso was for around €25.6 per share.

"Weir believes it made a compelling proposal but remains financially disciplined and therefore does not intend to pursue this opportunity further at this time," the company said.

There had been worries that Weir would add more cash to the share-based offer, potentially stretching its balance sheet.

Weir's strong position in the US shale gas sector could attract a bid from a larger rival despite a recent hiatus in activity in the shale sector.

Weir has been the subject of takeover activity in the past.

Fifteen years ago, Weir rejected a 300p-a-share bid approach from American company Flowserve Corporation. This approach valued Weir at £611 million. Weir Group shares yesterday closed down 20p or 0.8 per cent at 2584p.

Weir's earnings are expected to be flat this year, before rising eight per cent next year.

The company has signalled in recent months that it could have access to a number of potential acquisition opportunities.

But one large Weir investor said: "We might be a little bit nervous if Keith comes out of this deal and straight into another."