Weir abandons $6.1bn bid to buy rival Metso
Scottish engineering company Weir Group (LON:WEIR) has dropped its pursuit of rival Metso after the Finnish firm rejected a sweetened multibillion-dollar bid on the grounds that it was "significantly" undervalued and appeared "opportunistic."
The improved offer, which value Metso at $6.13 billion, was Weir's second and last attempt to forge an equity tie-up at a 34% premium compared with where Metso shares were trading March 26, one day before Weir made an initial approach.
Metso’s board, which firmly rejected Weir’s first approach in April saying it would prefer to remain independent, rebuffed the new bid as too low.
“The board of Metso did not engage with Weir and on 27 May 2014 rejected the proposal, based on its belief that the market does not fully value the prospects of Metso and that the proposal significantly undervalues Metso,” Weir said on Wednesday.
Weir said it believed the proposal was compelling but was not prepared to stretch itself further financially, adding it “did not intend to pursue this opportunity further at this time”.
The failed marriage of the companies, which make equipment for the energy and mining, was an attempt by the Scottish firm to boost its activities in rock-crushing, area in which Metso is a world leader.
The botched merger would have created a new company potentially valued at more than $15 billion, based on current market value for the individual firms.