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ANALYSTPUMP INDUSTRY

JUNE 2007ISSN 1359-6128

www.worldpumps.com

WEIR TO ACQUIRE SPM FLOW CONTROL

SUNDYNE, NIKKISO

RESTRUCTURE JOINT VENTURE

NE

WS

The Weir Group plc has agreed to acquire SPM Flow Control Inc for US$653 mil-lion in cash.

SPM, based in Fort Worth, Texas, USA, manufactures high-pressure well service pumps and related flow con-trol equipment, which operate in abrasive, high-wear appli-cations in oil and gas drilling and extraction. The business expects to generate revenues of US$320 million in calendar year 2007.

Weir is confident that this acquisition provides sig-nificant strategic, operational and financial benefits. The deal will give Weir an increased presence in the higher-growth upstream oil and gas market, with a par-ticularly strong position in the high-demand well stimulation niche. There is also the poten-tial to increase sales of both SPM’s and Weir’s exist-ing engineering services and products across the broad-er business platform of the enlarged group and an oppor-tunity in the medium term to enhance SPM’s productiv-ity through the application of Weir’s lean process initia-tives and production skills. SPM’s business model is increasingly aftermarket-

driven, as the installed base of SPM’s well service pumps grows.

Weir says that higher energy prices have driven an increase in oil and gas well development which, when coupled with the increasing use of well stimulation tech-niques to enhance hydrocarbon output, has resulted in strong demand for SPM’s portfolio of specialised well service products.

The acquisition is sub-ject to the approval of Weir’s shareholders at an extraordi-nary general meeting expect-ed to take place in mid July 2007.

“SPM is an exception-ally well-aligned business in a sector in which we have been most eager to grow. It ticks all the right boxes for us. SPM has a great mar-ket position in a core sec-tor for Weir and we have good potential to improve the business through our opera-tional expertise, geographic profile and financial strength. We are confident that the medium term operational benefits and extended mar-ket opportunities will gener-ate significant value for our shareholders,” said Weir’s chief executive Mark Selway.

Sundyne Corp and Nikkiso Co Ltd have agreed to restructure their 34-year-old joint venture to market and service pumps and com-pressors in the Asia Pacific region.

The restructured joint ven-ture company, which will now be named Sundyne Nikkiso, will continue to be headquar-tered in Tokyo, Japan, with offices in Asia. It will now have exclusive sales and serv-ice management responsibil-ity in the Asia Pacific region for Sundyne and Sunflo pump and compressor products manufactured by Sundyne and Nikkiso. Nikkiso will continue to market and sell Sundyne and Sunflo products inside Japan.

“The Sundyne Nikkiso joint venture will expand our global reach to make it easier for customers in the hydro-carbon and chemical process-ing industries to purchase and maintain Sundyne branded pumps and compressors,” said Phil Ruffner, president of Sundyne Corp.

Sundyne’s Daryl Lamy will manage the joint ven-ture company. Lamy was previously the service and sales excellence manager for Sundyne with sales respon-sibilities in the Americas and Asia Pacific.

CONTENTS COMPANY PROFILE 5–6 COMPANY WATCH 7–9 DIARY 15 DIVIDENDS 12ECONOMIC REVIEW 14 FINANCIAL CALENDAR 13 IN BRIEF 11,12,13 MARKET PROSPECTS 2–4 NEWS 1,12,13,16 NPD 14 ORDERS 11 PEOPLE 10 STOCK WATCH 15

COMMENT Just weeks after divesting its Glasgow-based pump operations (see Pump Industry Analyst, May 2007), Weir is set to trans-form itself with one of its biggest ever acquis-itions. SPM gives Weir a new platform for growth in a market with high margins and strong growth prospects. ■

SPM is owned by its current chief executive, Dan Lowrance, and associated family interests. Once the acquisition has been com-pleted, Lowrance will retire from SPM but will con-tinue to have a consultancy role with the business. Steve Noon, a senior Weir execu-tive, will then take over from Lowrance, and will report directly to Selway. The plan is to consolidate SPM within the Clear Liquid operations of Weir’s Engineering Products division.

SPM’s head office and main manufacturing plant, including fabrication, machin-ing, assembly, testing and service facilities, are based in Fort Worth, Texas. SPM has 10 other service centres: three in Canada, two in Texas and one each in Colorado, Louisiana, West Virginia, Scotland and Dubai. At the end of December 2006, SPM had 631 employ-ees, with 482 of these based at Fort Worth.