Heavy-equipment company Caterpillar will buy the Weir Group’s oil and gas (O&G) division in an all-cash deal for $405 million, which includes more than 40 Weir manufacturing and services locations and approximately 2,000 employees. The deal is expected to close by the end of the year.
This deal is in line with Caterpillar’s long-term growth strategy for expanded offerings and services, moving the company into the well-service industry with Weir’s lines of pumps, flow iron, consumable parts, wellhead, and pressure-control products. “Combining Weir Oil & Gas’s established pressure pumping and pressure-control portfolio with Cat’s engines and transmissions enables us to create additional value for customers,” said Joe Creed, vice president of Caterpillar’s Oil & Gas and Marine Division, in a press release. “This acquisition will expand our offerings to one of the broadest product lines in the well-service industry.”
Weir began moving out of the O&G sector with the sale of its flow control division to First Reserve, a private-equity investment firm focused on energy, in February 2019 and is one of many companies exiting the sector amid the global economic downturn and the industry’s transition to a net-zero-carbon environment. Companies such as Baker Hughes have outlined plans this year on how they will adjust their portfolio to line up with plans for an energy transition. Big majors such as Shell, BP, and Chevron have also sold off assets this year as part of cost-cutting measures or to aim for lower-carbon goals.