WEIR GROUP has ditched joint corporate broker Bank of America Merrill Lynch (BAML) after the investment bank’s appointment by a rival engineer sparked a “conflict of interest”.
The Glasgow-based group said it had terminated its deal with BAML “following the recent emergence of a new and undisclosed conflict of interest arising from its engagement as broker by another company”.
It did not name the other firm involved, but sources told The Scotsman that rival engineer IMI – headed by former Weir chief executive Mark Selway – had appointed BAML as its joint broker at the start of last month, to serve alongside JP Morgan Cazenove.
Selway, who ran Weir for eight years before leaving in 2009, became chief executive of IMI in January. Last week he said the firm was aiming to double its profits within five years.
An insider said Weir had found out about BAML’s appointment through a third party before the bank had been able to discuss the move with the acquisitive group, which has a global workforce of 15,000, including about 600 in Scotland.
While BAML and IMI did not believe there was a conflict of interest, the source said Weir felt otherwise and the “unfortunate series of events” led to the Scots firm terminating its relationship with the broker, which had advised on its recent failed attempt to forge a £9 billion merger with Metso, the Finnish maker of rock-crushing machinery.
Weir last week reported a 7 per cent drop in first-half operating profits to £201 million as strong growth in oil and gas failed to overcome the weakness in its mining markets. It continues to employ UBS as a broker.
BAML had been a corporate adviser to the engineer for more than three years. The bank declined to comment yesterday.