Caterpillar Inc. CAT has entered into an agreement with Weir Group PLC to acquire its Oil & Gas business for a cash price of $405 million. The buyout will expand Caterpillar’s offerings in the oil & gas market. Notably, the acquisition includes more than 40 Weir Oil & Gas manufacturing and services locations, and nearly 2,000 employees.

Based in Scotland, Weir Group is a global engineering company. Its Oil & Gas Division produces pumps, consumable parts, flow iron, wellhead and pressure control products. It provides pressure pumping, pressure control and after-market services to upstream oil and gas customers in North America and worldwide. This February, Weir Group announced its intention to divest the Oil & Gas division in line with its focus to become a mining technology pure play. Together, Weir Oil & Gas’ pressure pumping and pressure control portfolio and Caterpillar’s engines and transmissions will enable the latter to create additional customer value. Moreover, the buyout supports Caterpillar’s commitment to invest for long-term growth through operational excellence as well as expanded offerings.

Caterpillar’s Energy & Transportation segment is bearing the brunt of bleak demand in the oil and gas sector on account of low oil prices and sluggish capital spending at customers end. Global retail sales in the segment declined 16% during the three-month period ended August 2020. The segment has been contracting for 11 consecutive months. Moreover, the company’s global retail sales slipped 20% in August amid weak demand due to the pandemic. Considering the uncertainty of the duration of the coronavirus pandemic and its overall impact on all sectors, Caterpillar’s sales are likely to continue bearing the impact until the situation stabilizes.

The company did not provide any guidance with the second-quarter results and stated that its financial results for the remainder of 2020 will bear the