WS Atkins agrees £2.1 billion takeover by SNC-Lavalin
Staff Writer |
WS Atkins confirmed it has agreed to a takeover offer from Canadian engineering services firm SNC-Lavalin Group Inc which values the UK engineering and project management firm at £2.1 billion.
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Montreal-based SNC-Lavalin will pay 2,080 pence for per share for WS Atkins, in line with the price it indicated when it confirmed it had made an approach for the FTSE 250-listed firm earlier this month.
The price is a 35% premium to WS Atkins' closing price of 1,540 pence on the last business day before SNC-Lavalin announced the approach. Shares in WS Atkins closed at 1,982.00p on Thursday in London.
WS Atkins said that the offer price had been agreed by both companies on the basis that no final dividend for the financial year to the end of March would be paid by Atkins to shareholders.
In the 12 months to the end of September 2016, WS Atkins generated underlying earnings before interest, tax, depreciation and amortisation that was 9.8 times lower than the price offered by SNC-Lavalin.
The two said the deal will create a CAD12.1 billion fully integrated professional services and project management company with 53,000 employees, and will significantly improve SNC-Lavalin's overall margins and further balance its business portfolio.
The combined business will have its head office in Montreal. SNC-Lavalin's workforce will grow by about 51% with the addition of those 53,000 WS Atkins employees.
Current WS Atkins Chief Executive Uwe Krueger would leave the business once completed, but SNC-Lavalin intends to strike a transitional agreement with him.
SNC-Lavalin has offered to Heath Drewett, the current chief financial officer and executive director of Atkins, a promotion to lead WS Atkins within the combined entity, reporting to SNC-Lavalin's President and Chief Executive Neil Bruce.
Current WS Atkins director of HR & Marcomms James Cullens has been offered a role to help with key integration and people-related matters, with his remuneration to remain flat from his current pay packet. Both Drewett and Cullens will be awarded a one-time long term incentive plan award.
Annual pro-forma revenue of the combined business will be around CAD706.0 million, SNC-Lavalin said, with WS Atkins contributing CAD3.7 billion of "consistent, comparatively high-margin, revenues" - a significant proportion of which is not included in WS Atkins's backlog but is set to be recognised under framework agreements.
SNC-Lavalin said, after the takeover, the combined entity would be diversified over different sectors, forecasting that around 47% of the business will be based on Infrastructure, 32% on Oil & Gas, 16% on Power, 3% on Mining & Metallurgy and 2% Capital.
The global footprint, meanwhile, would be focused around 45% on North America, 20% in Europe, 20% in the Middle Easy and Africa and 15% in the Asia Pacific region. ■