Caterpillar Inc., one of the world’s largest construction and mining operators, has agreed to pay $405 million to buy the Texas-based oil and gas division of Weir Group plc.

Cat, as it is known, manufactures equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The takeover of Fort Worth-based Weir Oil & Gas from the Scotland-base global engineering giant, would beef up the pressure pumping, pressure control and aftermarket services for upstream customers.

“Combining Weir Oil & Gas’s established pressure pumping and pressure control portfolio with Cat’s engines and transmissions enables us to create additional value for customers,” said Vice President Joe Creed, who oversees Cat’s Oil & Gas and Marine Division. “This acquisition will expand our offerings to one of the broadest product lines in the well service industry.”

The acquisition requires approval by Weir shareholders and is subject to review by regulatory authorities. The transaction includes more than 40 Weir manufacturing and services locations and about 2,000 employees.

In 2011 and 2012 Weir began to beef up its Lower 48 oilfield services (OFS) business by acquiring a trio of U.S.-based operators. The unit then teamed up in 2016 with a unit of Rolls Royce plc to provide an integrated hydraulic fracturing system.

However, the Weir Group in February announced it would sell the U.S. business to become a mining technology pure-play. 

“Caterpillar is a great new home for Weir Oil & Gas, its world class people, products and services,” said Weir Group CEO Jon Stanton. “It will enable Weir Oil & Gas to continue to flourish, ensuring the business remains at the forefront of innovation and customer service in the future.” 

Tudor, Pickering, Holt & Co. (TPH) analysts said it was “no secret” that Weir wanted to become a pure-play mining equipment manufacturer, and the sale of the OFS business “puts them right where they want to be.” The “beleaguered (yet beloved) oilfield service space would benefit from (mucho) consolidation, as there are real synergies and competitive landscape benefits that’ll emerge as a result.

“To boot, as the global activity outlook wanes, North American drilling/completion activity is likely to remain well below prior cycle levels for the foreseeable future.”

In the oil and gas business, Cat is mostly known for its related engines and transmission business, but it also owns Black Horse LLC, according to TPH. Black Horse “sells pumps (fluid and power ends), valves, and seats into the well servicing space.” Weir “is one of the (very) big dogs in the pump manufacturing game, so this deal clearly benefits industry structure…”