Engineering business weir group on monday agreed to offload its struggling oil and gas equipment division to caterpillar of the us, prompting a surge in the companys share price.

The ftse 250 group is selling the unit for 314m in cash as chief executive jon stanton seeks to focus the manufacturer on mining kit.

Shares ofthe scottish company, which has its headquarters in glasgow and is known for heavy-duty valves and pumps, jumped 16 per cent to 14.80 by late afternoon after rising more than 20 per cent at one point.

The disposal leaves a slimmed-down version of weir, a historic brand in british engineering, while reducing its exposure to the volatility of hydrocarbon markets.

It comes at a time when many diversified industrial groups are exiting activities considered non-core to focus on a main area of expertise.

Mr stanton said the deal represented a major milestone in transforming the group into a focused, premium mining technology business.

He added: demand for the commodities that our equipment helps to produce will be very strong over the long term, which is obviously not necessarily the case for oil and gas.

Even if commodity prices decline or mining capex declines, our customers will continue running the mines as they have done during the covid-19 situation.

Analysts at liberum said thesale was the final step in transforming the group into a pure play mining company, adding that the314m purchase price looked reasonable.

Weir thrived on the back of the commodities boom that began in the early 2000s, but from the middle of the last decade felt the chill wind of the slowdown that followed.

In more recent times, the company has been hit by its exposure to the north american shale sector, with demand for oil falling sharply since the start of the year. adjusted pre-tax profit dropped 27 per cent to 108m in the first six months of the year.

For heavy equipment maker caterpillar, the acquisition represents a bet on the oil and gas sector.

Joe creed, vice-president of caterpillars oil and gas and marine division, said the move will expand our offerings to one of the broadest product lines in the well service industry.

Weir will continue to manufacture equipment specialising in the extraction of copper, gold and iron ore, as well as lithium and other battery metals.

The company, which celebrates its 150th birthday next year, processes the majority of the worlds mined copper and has regional manufacturing hubs across the southern hemisphere, as well as a single big uk plant.

In 2018, the group acquired esco, a manufacturer of ground-engaging tools for large mining machines, before selling off its flow control business, which supplied the power generation, nuclear and chemical industries.