Weir has acquired Houston-based Seaboard Holdings in a $675 million all cash deal
Weir Group has acquired US shale fracking wellhead specialist Seaboard Holdings in a $675million (£431 million) deal.
The Glasgow-based pump and drilling equipment supplier said the all cash acquisition, which it is funding using existing bank facilities, will compliment its existing US and Canadian operations.
Weir is gearing up to capitalise on the North American development boom in "unconventional" oil and gas extraction, which includes fracking - a method of extracting oil and gas by fracturing shale formations.
In a statement released today, Weir said: "The growing shift in North America towards unconventional oil and gas development and the rapid growth of high pressurehydraulic fracturing has increased demand for Seaboards products and services.
"Seaboards range of high-end surface equipment is directly adjacent to Weirs market leading portfolio of frac pumps and other well completion equipment with a business model closely aligned to Weirs core competencies in highly engineered products used in harsh environments."
A 2008 white paper published by the US oil and gas giant, Halliburton, estimated current recoverable reserves of shale gas in the US are conservatively between 500 to 1,000 trillion cubic feet.
Weir said it is already investing in expansion of its manufacturing facilities in Texas and Canada as it is struggling to meet rising demand for specialist pumps and equipment related to shale gas extraction.
Keith Cochrane, Weir's chief executive, said: "Seaboard is a well-managed business, with a strong position in a market that we understand well. The acquisition is perfectly in line with strategy.
"It broadens our product offering and fits into our business model of growing the installed base of original equipment from which we drive aftermarket opportunities.
"There is great potential to strengthen the business further through our lean engineering and operational processes and extensive sales and service networks.
"We are confident that the extended market opportunities and medium term operational benefits will create significant value for our shareholders."
Houston-based Seaboard, which currently employs around 400 people, is forecast to hit revenues of $216 million for the year to December 31, 2011 and earnings before interest and overall costs of around $58million.
Seaboard is also in the process of concluding its own acquisition of a Canadian wellhead parts distributor, AJ Industries, which generated sales of $163million last year.
Weir said its acquisition of Seaboard also builds a platform for growth "into adjacent markets not currently served by either business".
Seaboard's existing senior management team, led by chief executive, Kelly Joy, will continue to manage the business and will report to Steve Noon, divisional managing director of Weir Oil and Gas.
Kelly Joy, said: "In recent months we have been looking for the ideal partner to take the business forward while retaining Seaboards identity and commitment to customer service.
"We have spent a lot of time with the Weir team and have been hugely impressed by the way they have developed Weir SPM since its acquisition in 2007.
"I am convinced that this is the best outcome for our employees, customers and shareholders. The senior team at Seaboard intends to remain with the business and we are all excited by the extensive opportunities arising from the combination with Weir."