Weir Group’s proposal to merger with Finland’s Metso was rejected by the engineering firm which said the deal was not in the best interest of its shareholders.
The Wall Street Journal reported that Weir approached Metso with multi-billion dollar proposal to merge the companies that make equipment for the energy and mining sectors.
Metso rejected the offer, saying in a statement, “The Metso board remains extremely positive and confident in Metso's stand-alone growth and value creation prospects by pursuing its current strategy," Metso said. "As a consequence, the board has rejected Weir's proposal and sees no reason to commence discussions regarding a potential combination."
In response Weir said it had noted Metso's announcement and continues to believe in the strategic rational for bringing the two companies together. It added that there was no certainty it would revise the terms of its original proposal.
Weir had proposed an all-share merger under which Metso shareholders would receive 0.8400 Weir shares per Metso share held, resulting in Metso shareholders owning 37 percent of the combined company.
"The proposal was structured to enable the shareholders of both Metso and Weir to share in the very significant value creation that would result from material cost synergies in addition to further revenue synergies expected to be generated through the combination," Weir said in its statement.
Weir added that it had also proposed that the combined company would have a significant presence in, and long term commitment to Finland as well as the U.K. with listings in both countries. The combined company would also have shared management and board responsibilities.