* Says Weir proposal not in the best interest of owners
* Weir says might not revise offer terms
* Metso shares down 3.5 pct, Weir down 1.5 pct
(Adds premium calculated from Weir statement)
By Jussi Rosendahl and Stephen Eisenhammer
HELSINKI/LONDON, April 16 Finland's Metso
spurned a merger approach from rival engineering firm
Weir on Wednesday, leaving the British company casting
around for other ways to boost its mining equipment business.
Weir said there was no certainty it would improve the
proposed offer, which would have valued Metso at around a $5
billion. Its plan ran into trouble as soon as it emerged on
April 1, when the Finnish state said it opposed a takeover.
Metso's shares, which had surged after Weir's approach, were
down 3.5 percent in Helsinki at 27.74 euros. That was still
above the price Weir had proposed of around 25.6 euros per
share. Weir stock was down 1.5 percent.
"The board of directors ... has come to the unanimous
conclusion that this proposal is not in the best interest of
shareholders," Metso said in a statement, adding it saw no
reason to commence talks with Weir.
A deal would have helped Weir expand further into the
crushing segment of the mining equipment industry, where Metso
is a market leader.
Weir is keen to expand its mining arm after years of strong
growth in its oil and gas division, which has seen profits
triple since 2009. The company sits in a crowded mid-sized
industrial sector which industry insiders say is ripe for
consolidation in order to provide a wider range, and a greater
scale, of equipment and services to cost-conscious clients.
Bankers have said a failure to merge with Metso could make
Weir, already frequently the subject of takeover speculation, a
target for big players such as General Electric or
Honeywell that are keen to access the Glaswegian
company's lucrative position in U.S. shale.
Weir said on Wednesday it believed its all-share proposal -
in which Metso would have received about 37 percent of the new
company - would have had significant benefits.
The firm said it offered 0.84 Weir share per Metso share
held. Using the closing price for both companies on March 27
when the deal was proposed and the exchange rate at the time,
that implied a 14 percent premium over Metso's share price.
"The Board of Weir believes that it has made an attractive
merger proposal and there is no certainty that it will revise
the terms of its proposal," it said in a statement.
A source had earlier told Reuters that Weir offered Metso a
5-10 percent premium over its recent share price.
Weir confirmed it had proposed that the combined company
would have a strong presence and listings both in Finland and
Britain. That was not enough for the Finnish state, which owns
11 percent of Metso and insisted the company could flourish
Metso spun off its paper machine business Valmet
at the start of 2014, basically halving the size of the company.
"The Metso Board remains extremely positive and confident in
Metso's standalone growth and value creation prospects by
pursuing its current strategy," the company said.
($1 = 0.7234 euros)
(Reporting by Jussi Rosendahl and Stephen Eisenhammer; editing
by Erica Billingham and Tom Pfeiffer)