Acquisition

Weir Group PLC
21 June 2007


The Weir Group PLC

21 June 2007

Acquisition of SPM Flow Control, Inc.


The Weir Group PLC ('Weir' or 'the Group'), is pleased to announce that it has
agreed to acquire SPM Flow Control, Inc ('SPM') for US$653 million (£328 
million). Anticipated revenues for calendar year 2007 are US$ 320 million (£161
million).

SPM, based in Fort Worth, Texas, is a leading manufacturer of high-pressure well
service pumps and related flow control equipment, which operate in abrasive,
high-wear applications in oil and gas drilling and extraction.

The acquisition of SPM provides a new platform for growth in an end-market and
area that Weir understands well. Weir is confident that this acquisition
provides significant strategic, operational and financial benefits, including:

 • increased presence in the higher-growth upstream oil and gas market, with
   a particularly strong position in the high-demand well stimulation niche;
 • a business model that is increasingly aftermarket-driven, as the installed
   base of SPM's well service pumps grows;
 • potential to increase sales of both SPM's and Weir's existing engineering
   services and products across the broader business platform of the enlarged
   group;
 • opportunity in the medium term to enhance SPM's productivity through the
   application of Weir's lean process initiatives and production skills; and,
 • immediate earnings enhancement and an expected return in excess of the
   Group's cost of capital within three years.

Higher energy prices have driven an increase in oil and gas well development
which, when coupled with the increasing use of well stimulation techniques to
enhance hydrocarbon output, has resulted in strong demand for SPM's portfolio of
specialised well service products.

The consideration of US$653 million will be paid in cash on completion and will
be satisfied by a combination of new and existing bank facilities and available
cash balances.

The acquisition is subject to the approval of Weir's shareholders at an
extraordinary general meeting ('EGM') expected to take place in mid July 2007.

Weir's chief executive, Mark Selway, commented:
'SPM is an exceptionally well-aligned business in a sector in which we have been
most eager to grow. It ticks all the right boxes for us. SPM has a great market
position in a core sector for Weir and we have good potential to improve the
business through our operational expertise, geographic profile and financial
strength. We are confident that the medium term operational benefits and
extended market opportunities will generate significant value for our
shareholders.'


An analysts' meeting to discuss the acquisition will be held today Thursday 21
June 2007 at 0930 hours at Room 80, UBS, 7th Floor, 1 Finsbury Avenue, London,
EC2M 2PP.




Contact details:
The Weir Group PLC                     Tel. [phone]
Mark Selway, Chief Executive
Keith Cochrane, Finance Director
Helen Walker, Public Relations Manager Tel. [phone] (Mobile: [phone])

Maitland                               Tel. [phone]
Suzanne Bartch                        (Mobile: [phone])
Peter Ogden                           (Mobile: [phone])





                               THE WEIR GROUP PLC

                     ACQUISITION OF SPM FLOW CONTROL, INC.


1. Introduction

Weir has entered into an agreement to acquire SPM for US$653 million (£328
million) in cash.

SPM, based in Fort Worth, Texas, is a leading manufacturer of high-pressure well
service pumps and other related flow control equipment, which operate in
abrasive, high-wear, applications in oil and gas drilling and extraction.

The acquisition is conditional on the approval of Weir's shareholders at an EGM.
A circular containing a notice convening this meeting is expected to be posted
shortly.


2. Background to and reasons for the proposed acquisition

Strategy

In 2002, Weir outlined its strategy to realign the portfolio of Group
businesses: to exit lower margin activities, restructure underperforming
businesses and achieve growth in higher-demand, higher-margin sectors. At the
same time, the Group implemented the Weir Production System, a structured
process geared to maximise operational performance. The benefits of this
strategy were evident in the results for 2006, published on 21 March 2007,
showing a 40 per cent year-on-year increase in pre-exceptional profit before
tax. 80 per cent of the Group's £1.1 billion order input in 2006 was generated
from its core markets of mining, oil and gas, power generation, marine and
defence.

The Group's strong cash generation and balance sheet capacity have provided it
with the flexibility to pursue growth through acquisitions aligned with its core
businesses. The Company's strategic acquisition criteria require target
companies to be centred on engineering products and services. Characteristics
sought in any acquisition include a strong position in a high-growth segment,
high aftermarket content, a technological edge, an international market presence
with scope for expansion, and sound profitability. SPM satisfies all of these
criteria.

SPM's positive market outlook

A key driver of demand for SPM's products is the level of hydrocarbon
exploration and production activity. The independent research undertaken for
Weir indicates that the number of new oil and gas wells is expected to continue
to grow and identifies a continuing shift towards 'unconventional' wells, which
require more intensive use of the specialised products supplied by SPM.

Strategic fit and benefits of the proposed acquisition

The proposed acquisition meets Weir's acquisition criteria and provides the
enlarged Group with significant strategic and operational benefits.
Specifically, SPM presents:

 • increased presence in the higher-growth upstream oil and gas market, with a
   particularly strong position in the high-demand well stimulation niche;
 • a business model that is increasingly aftermarket-driven, as the installed
   base of SPM's well service pumps grows;
 • potential to increase sales of both SPM's and the Group's existing 
   engineering services and products across the broader business platform of
   the enlarged Group; and,
 • opportunity in the medium-term to enhance SPM's productivity through the
   application of the Group's lean process initiatives and production skills.

The exceptional growth experienced by SPM in recent years means that the Group's
plans for SPM include investment in upgraded business systems, improved plant
layout and a significant strengthening of related management disciplines. In
addition, the extensive access to operations provided during due diligence
indicates that it will be necessary to increase staffing to a level more
appropriate for a business of SPM's scale. The Group is also anticipating
adjustment to component prices, reflecting US dollar weakness. Although these
factors will increase SPM's cost base, they are necessary to strengthen the
business, improve operational efficiency for profitable growth and prepare the
business for the longer term.

The Group is confident that its proven capabilities of Weir's business model
will deliver effective integration without undue disruption to either business.


3. Information on SPM

SPM's pump products and associated spare parts account for 72 per cent of
revenue and are largely employed in the well stimulation technique, used to
increase output from oil and gas wells that might otherwise be uneconomic. The
number of wells drilled globally has risen by almost 50 per cent from 2003 to
2006, while pumping horsepower applied to the well stimulation process of
hydraulic fracturing in North America has grown by 67 per cent over the same
period. Beyond hydraulic fracturing, SPM's pumps have application in pressurised
delivery at the wellhead of wellcasing cement and drilling mud.

SPM's other flow control products provide 20 per cent of revenue and include
valves, chokes, manifolds, swivel joints and connectors. SPM is one of the few
suppliers of both the pump and a full range of flow control products for
deployment between the well service unit and wellhead.

The 8 per cent balance of SPM's revenue derives from the provision of related
mobile recertification, refurbishment and equipment rental services.

The materials generally pumped to stimulate well output consist of an aggressive
mix of water, chemicals and sand, which imposes high wear on equipment. SPM
management estimates that aftermarket activities, including spare parts,
replacement equipment and service, today represent approximately 45 per cent of
SPM's total revenues.

Most of SPM's revenues relate to onshore hydrocarbon production with,
geographically, the United States accounting for approximately 66 per cent of
revenues, Canada 22 per cent, Europe 7 per cent, Asia and Far East 4 percent and
1 per cent from the rest of the world.

Customers include manufacturers of well service equipment, well service
operators, drilling contractors, oilfield supply houses and integrated oil
companies. The top 10 customers, which include leading names in these sectors,
represented around 70 per cent of calendar 2006 revenues.

SPM has a consistent history of repeat business from its customers, with
research independently conducted on behalf of Weir confirming that:

 • in the pumps market, SPM outperforms competitors in product quality and
   customer service, two of the most important purchasing criteria;
 • customers are generally unwilling to source from unproven manufacturers due
   to the risk to production from the well; and,
 • to a large degree, customers return to the original equipment provider for
   replacement parts.

SPM's head office and principal manufacturing plant, comprising fabrication,
machining, assembly, testing and service facilities, are located on a 12-acre
site in Fort Worth, Texas. SPM has ten other service centres, three in Canada,
two in Texas, and one each in Colorado, Louisiana, West Virginia, Scotland and
Dubai. All facilities are leased, with the exception of the administration
building in Fort Worth and the Aberdeen service centre. The Fort Worth plants
and Texas service centres are leased from an entity which is controlled by
certain of the current owners of SPM. Weir will continue to lease the Texas
properties on normal market terms for a period of 4 years.

As at the end of December 2006, SPM had some 631 employees, of whom 482 were
based at Fort Worth.

SPM is owned by its current chief executive, Dan Lowrance, and associated family
interests. At completion, Mr. Lowrance will retire from SPM but will continue in
a consultancy role to the enlarged group on an ongoing basis. It is intended
that he will be succeeded by Steve Noon, a senior executive employed by Weir,
who will report directly to the Group's chief executive, Mark Selway. The senior
management team will be further supplemented by Group manufacturing and business
systems specialists. Appropriate retention and incentive arrangements have been
put in place for the senior management team. Following integration, SPM will be
consolidated within the Clear Liquid operations of Weir's Engineering Products
division.


4. Summary financial information

SPM had gross assets at 31 March 2007 of US$155.7 million (£78.2 million) and
profits before tax for the nine months ended 31 March 2007 of US$60.4 million
(£30.4 million). The net assets being acquired by the Group include net cash
balances of US$2.9 million as at 31 March 2007.

SPM's revenue, EBITDA, operating profit, profit before tax and net profit after
tax, for the three years ended 30 June 2006, together with comparative figures
for the nine months ended 31 March 2007, are summarised below.

US$millions            Year ended     Year ended     Year ended   9 months ended
                     30 June 2004   30 June 2005   30 June 2006    31 March 2007

Revenues                     55.8           78.8          140.6            208.6

EBITDA                        8.6           12.6           43.0             62.6

Operating profit*             6.8           10.4           40.5             60.5

Profit before tax             6.5           10.0           40.1             60.4

Net profit after tax          4.7            6.2           26.9             39.9

*Operating profit in 2006 includes exceptional income of US$8.0 million 
representing the settlement of a claim against a supplier.

The financial information reflects SPM's success in the last three years, with
revenue increasing from US$56 million in the year ended 30 June 2004 to US$141
million in the year to 30 June 2006.

Higher energy prices, particularly for US domestic gas, have driven an increase
in oil and gas well development, partially compensating for historical
underinvestment in the industry. This, when coupled to the increased use of well
stimulation technologies, has resulted in strong demand for SPM's specialised
portfolio of well service products.

SPM's growth has continued in the nine months to 31 March 2007, with revenue of
US$209 million and operating profits of US$60.5 million. These results have
benefited from a US$6 million positive cost impact of delayed infrastructure
spending and favourable component pricing which is not expected to be sustained.


5. Principal terms and conditions of the proposed acquisition

The proposed acquisition is of the entire issued share capital of SPM and is
conditional on the approval of the shareholders of Weir. If Weir does not obtain
this approval, it is required to pay to the shareholders of SPM a break-fee of
the lesser of US$30 million and an amount equal to 0.99 per cent of the market
capitalisation of Weir based on the closing market price on the London Stock
Exchange on 20 June 2007.

The Group and SPM intend to make all relevant filings under the United States
Hart-Scott-Rodino Anti-trust Improvements Act of 1976, as amended.

The sale and purchase agreement contains warranties of a type customary in the
USA for a transaction of this nature.


6. Funding the proposed acquisition

Two of the group's principal lending banks, RBS and HSBC, have provided new
underwritten facilities totalling £550m to support the acquisition of SPM, under
agreements dated 20 June 2007. The acquisition will be funded from a combination
of the new and existing facilities together with available cash balances.


7. Current trading and prospects for the enlarged Group

The Group's current trading is in line with the Directors' expectations and is
consistent with the comments made in the AGM statement released on 9 May 2007:
'the Group has started the year well, even against the strong first quarter of
last year and it views the outcome for the year as a whole with confidence'.

Based on SPM's current order book, due diligence work on its order prospects and
the independent market research undertaken by the Group, it is a reasonable
assumption to expect revenues of the order of $320 million in calendar year
2007, some 15 per cent ahead of actual revenues for the nine months to 31 March
2007 pro-rata on an annual basis. Future operating margins are expected to
reflect the absence of favourable items in the prior period which we anticipate
will progressively normalise to 2006 levels (excluding exceptional income)
when taking into account current purchase cost factors and the need to increase 
infrastructure spending to support recent business growth. The proposed 
acquisition is expected to be immediately earnings enhancing for Weir and to 
generate a return in excess of the Group's cost of capital within three years.


8. Shareholder circular and outline timetable

Weir intends shortly to send a circular to shareholders giving full details of
the acquisition and including notice of the EGM to consider it. The EGM is
expected to take place in mid July 2007 with completion of the acquisition,
subject to shareholder approval, expected shortly thereafter.



Note 1: References to US$/£ exchange rates use the exchange rate of 1.99 as at 
        19 June 2007.

Note 2: All references to percentage contribution to revenue in section 3 relate
        to the period 9 months ended 31 March 2007.

Note 3: Under US legislation, SPM's financial statements are not required to be
        audited, and were subject to audit only at SPM's request in 2007. Both 
        the accountant's opinion contained within the accountants report and the
        auditors report on SPM's financial statements are modified for the three
        years to 30 June 2006, as the evidence available to them in respect of 
        inventory was limited because the counting of the physical inventory was
        not observed by an auditor. Owing to the nature of SPM's records, the 
        reporting accountants were unable to obtain sufficient appropriate 
        evidence regarding inventory quantities by using other procedures. This
        modification only relates to inventory and is not significant to 
        shareholders because SPM, observed by Weir and the reporting 
        accountants, undertook a full inventory count as at 31 March 2007.

        In consequence, the Directors are able to recommend the proposed 
        acquisition notwithstanding the modified accountants report as the full
        inventory count was performed and provided adequate assurance over 
        quantity and valuation to give a true and fair opinion of the balance 
        sheet as at 31 March 2007. The financial information for the nine months
        ended 31 March 2007, as included in the accountants report, is qualified
        therefore only in respect of opening inventory.



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