DealBook: Weir to Drop Takeover Pursuit of Finnish Rival Metso

LONDON – The Scottish engineering company Weir Group said Wednesday that it is dropping its pursuit of a Finnish rival, Metso.

Metso, which provides services for the mining, construction and oil and gas sectors, confirmed last month that it had received an "unsolicited" bid from Weir about combining the two companies, but declined to engage in discussions.

Weir said on Wednesday that it had approached Metso with a sweetened proposal last week, but that the Finnish company believed the market isn't fully valuing Metso's prospects and the revised, all-share offer undervalued the company.

"Weir believes it made a compelling proposal but remains financially disciplined and therefore does not intend to pursue this opportunity further at this time," the company said.

In a separate statement, Metso said that a takeover by Weir "at these conditions would not be in our shareholders' best interests."

"We have considered the approaches from Weir carefully and thoroughly," Mikael Lilius, the Metso chairman, said in a statement. "We believe that Metso has a real opportunity to create significant value for all its shareholders by pursuing its own course."

In its revised offer, Weir said that Metso shareholders would have received 0.95 shares of Weir for each share of Metso, a 13 percent increase over its prior proposal. Metso shareholders would have owned 40 percent of the combined company.

The offer would have valued each Metso share at 30.49 euros a share, or about $41.56. That would have valued the company at about €4.6 billion.

The revised takeover proposal would have represented a 34 percent premium over Metso's closing price of €22.75 on March 26, the last day before press reports that Weir was considering a takeover bid for Metso.

Shares of Metso were down 2.7 percent to €28.28 in trading in Helsinki on Wednesday morning.

Weir said it also proposed a special dividend payable to all shareholders in the combined group post-closing equivalent to €2.13 a share in cash to each Metso shareholder.

Weir said it envisioned that the merged entity would be listed in both London and Helsinki.

Metso, created by a merger in 1999, reported revenue of €3.86 billion last year and employs about 16,000 people worldwide.

Weir, which began in Glasgow in 1871, posted 2013 revenue of 2.43 billion pounds, or about $4.04 billion, and employs more than 15,000 people in 70 countries.

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