Scottish-based Weir Group PLC has entered into an agreement to acquire Trio Engineered Products, a Chinese-American manufacturer of crushing and separation equipment for the mining and aggregates markets, for an enterprise value of approximately US$220 million.

Weir says 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 US10 million over a two-year period.

Weir is a market leader in the provision of pumping equipment to the mining mill circuit, which separates rock from ore. The acquisition of Trio will build on Weir’s recent successful entry into the adjacent comminution segment of the mill circuit.

Weir says the acquisition will enable it to provide a more complete product and service offering to existing mining customers; leverage Trio’s cost effective manufacturing platform; and utilize Weir Minerals’ global platform and relationships across mining markets.

It says this will enable the merged body to accelerate Trio’s original equipment revenue growth and capture a greater proportion of the aftermarket opportunity from the installed base of Trio equipment. Trio has limited service presence outside of China.

It will also 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 USA. Trio designs and manufactures a range of crushers, screens, feeders, washers and material handling solutions for the aggregates and minerals markets.

In 2013 31% of Trio’s revenues were generated in North America, primarily in the growing aggregates sector; 25% were in China, mainly serving the domestic mining industry; the balance were 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 is being acquired from majority owner Navis Capital and the company’s management team. Trio’s three founders have agreed to remain with the company following acquisition. Completion of the acquisition is anticipated to take place before the end of October.

Weir Group chief executive Keith Cochrane says, “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.”

Trio’s chief executive Mike Burke says, “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.”

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