Acquisition of Dallas-based Novatech part of wider strategy to expand in US 'fracking' industry
Novatech, based in Dallas, has been a supplier to Weir for high pressure pumps used in "unconventional"oil and gas extraction, which includes fracking - a method of extracting oil and gas by fracturing shale formations.
The latest deal adds to a s431 million acquisition Weir agreed in November 2011 for Houston-based Seaboard Holdings, a wellhead specialist in shale fracking.
Seaboard, which currently employs around 400 people, was forecast to hit revenues of $216 million for the year to December 31, 2011 and earnings before interest and overall costs of around $58million.
At the time of the Weir acquisition,Seaboard was also in the process of concluding its own acquisition of a Canadian wellhead parts distributor, AJ Industries, which generated sales of $163 million last year.
Weir is acquiring new businesses to capitalise on the North American development boom in shale oil and gas extraction.
Weir chief executive Keith Cochrane said: "This deal enables Weir to broaden our aftermarket expendable product portfolio in this fast-growing sector, where increasing operating intensities require equipment and components to be more regularly replaced and serviced.
"With the recent acquisition of Seaboard, this strengthens further Weir's presence in the North American unconventional oil and gas markets and builds a larger upstream product range to offer the developing international shale markets."
President, chairman and chief executive of Novatech, Starr L Pitzer Jr, added: "We have worked with Weir's upstream business as a supplier for a number of years and have come to know the company well and admire the way they operate.
"Through joining the group, I believe that Weir's global sales and service networks will enable the business to grow, not only in North America, but also by taking Novatech products to international customers."
A 2008 white paper published by the US oil and gas giant Halliburton estimated conservatively that current recoverable reserves of shale gas in the US are between 500 and 1,000 trillion cubic feet.
Weir is already investing in expansion of its manufacturing facilities in Texas and Canada after admitting it was struggling to meet the rising demand for specialist pumps and equipment related to shale gas extraction.