The Weir Group PLC (LON:WEIR), a UK-based engineering company, confirmed reports that it approached its Finnish competitor, Metso Oyj (HEL:MEO1V) for a potential merger.

Weir Group Logo

In a statement, the UK-based engineering company said, “Weir confirms that it has made an indicative all share merger proposal to the board of Metso. The board of Weir believes that there is a strong strategic rationale for bringing the two companies together which would offer the opportunity for significant efficiencies and synergies, creating significant value for all shareholders.”

The Weir Group PLC (LON:WEIR) added that it envisions that the combined company will trade at the London and Helsinki Stock Exchanges. The company said it will make further announcements regarding the matter in due course.

Metso to consider Weir Group proposal

In a separate statement, Metso Oyj (HEL:MEO1V) also confirmed that it received the unsolicited merger proposal from The Weir Group PLC (LON:WEIR) today. The Finnish company emphasized that it is still in the process of considering its competitor’s proposal. Metso clarified that it is currently not, and has not been engaged in negotiations with Weir.

The Weir Group PLC (LON:WEIR) or Metso Oyj (HEL:MEO1V) did not reveal any details regarding the terms of the merger proposal, but reports indicated that the combination could be worth as much as $14.8 billion based on combined market capitalization.

The Wall Street Journal noted that UK-based engineering company made several acquisitions in over the past few years, but the amount of its previous transactions were not close to the size its proposed deal with the Finnish company. In the past, analysts even perceived The Weir Group PLC (LON:WEIR) as a potential takeover target.

Metso stock soars

The stock price of Metso Oyj (HEL:MEO1V) increased more than 19% to €28.34 in Helsinki on Tuesday, which was primarily driven by reports of the merger-proposal from The Weir Group PLC (LON:WEIR).

‘Interesting options open’

The major shareholders of Metso Oyj (HEL:MEO1V) include Cebian Capital, an activist investor and Solidium, a state-owned investor in Finland. Kari Jarvinen, CEO of Solidium refused to comment on the merger proposal of the The Weir Group PLC (LON:WEIR), but he stated that “Metso has very interesting options open to it to create value to its owners.”