SNC-Lavalin pays $3.6B in land­mark deal

Montreal Gazette - - FRONT PAGE - ROSS MAROWITZ

SNC-Lavalin is making the largest trans­ac­tion in its his­tory af­ter reach­ing an agree­ment to pur­chase Bri­tish en­gi­neer­ing and project man­age­ment con­sul­tancy WS Atkins PLC for $3.6 bil­lion.

The Mon­treal-based com­pany an­nounced the trans­ac­tion Thurs­day, about two weeks af­ter it con­firmed making a ten­ta­tive of­fer.

The deal, ex­pected to close in the third quar­ter and to be ap­proved by the boards of both com­pa­nies, will en­hance SNC-Lavalin’s size by boost­ing an­nual rev­enues to $12.1 bil­lion and in­creas­ing em­ployee num­bers to 53,000.

“This ac­qui­si­tion is fully aligned with our stated growth strat­egy of be­com­ing a rec­og­nized global E&C pow­er­house,” SNC-Lavalin CEO Neil Bruce said in a con­fer­ence call af­ter mar­kets closed. He said the ad­di­tion of the com­ple­men­tary busi­ness ex­pands SNC-Lavalin’s ge­o­graphic reach and di­ver­si­fies its global cus­tomer base.

Founded in 1938, WS Atkins has 18,000 em­ploy­ees and about two bil­lion pounds of an­nual rev­enues from ac­tiv­i­ties mainly in the U.K. and Scan­di­navia, along with the U.S., Mid­dle East and Asia. About 86 per cent of its rev­enues are in in­fra­struc­ture and 14 per cent in en­ergy.

Bruce said the ad­di­tion of WS Atkins will in­crease mar­gins and im­prove SNC-Lavalin’s po­si­tion in in­fra­struc­ture, rail and tran­sit, and nu­clear by cap­i­tal­iz­ing on large-scale in­fra­struc­ture projects in North Amer­ica and nu­clear main­te­nance and de­com­mis­sion­ing projects.

It will ac­quire WS Atkins stock for 20.80 pounds per share in cash, sub­ject to ap­proval by share­hold­ers, reg­u­la­tory and court ap­proval.

SNC-Lavalin’s largest share­holder, The Caisse de de­pot, will pro­vide $400 mil­lion through the pri­vate pur­chase of eq­uity and a $1.5-bil­lion non-re­course loan se­cured by its in­ter­est in High­way 407 near Toronto. The rest is fi­nanced by debt and the is­suance of eq­uity.

About $120 mil­lion in cost sav­ings are ex­pected one year af­ter the ac­qui­si­tion.

“This trans­ac­tion has the po­ten­tial to trans­form SNC-Lavalin into one of the lead­ing en­gi­neer­ing con­sult­ing firms in the world,” said la Caisse CEO Michael Sabia in a state­ment. “The ac­qui­si­tion will strengthen the com­pany’s po­si­tion in high-growth mar­ket seg­ments and in­dus­tries, in ad­di­tion to en­hanc­ing its pres­ence in the Euro­pean mar­ket.”

RYAN REMIORZ/THE CANA­DIAN PRESS FILES

Mon­treal-based SNC-Lavalin’s ac­qui­si­tion of WS Atkins PLC will in­crease SNC-Lavalin’s size by rais­ing an­nual rev­enues to $12.1 bil­lion and grow­ing staff num­bers to 53,000.

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