Weir drops pursuit of Finnish engineer Metso

28th May 2014 07:07

Engineering group Weir has dropped its pursuit to merge with Metso after continued rejections from the board of the Finnish rival.On May 20th, Weir sweetened its offer under which Metso shareholder would have received 0.95 Weir shares per Metso share, a 13% increase to the 0.84 exchange ratio initially proposed in April.The latest proposal valued Metso's share at €30.49, or €4.6bn (around £3.7bn), a 34% premium to its undisturbed share price of €22.75 on March 26th, the day before bid speculation began. Assuming full acceptance from Metso shareholders, they would have owned around 40% of the combined group, compared with the 37% stake initially proposed.Metso provides engineering services to the mining, construction, oil and gas, and pulp and paper industries. Weir had previously said that there is a "strong strategic rationale" for merging the two companies and an opportunity for significant synergies. However, Weir said on Wednesday that Metso's board did not engage in discussions and rejected the second proposal as it felt it undervalued the company and its prospects."Weir believes it made a compelling proposal but remains financially disciplined and therefore does not intend to pursue this opportunity further at this time," Weir said.BC