Kentz makes bid for US-based Valerus FS

Kentz Corporation has made a bid for the Valerus Field Solutions business, in a $435 million cash deal.

The firm, which is the holding company of the Kentz engineering and construction group, is seeking to establish itself as a market leader in providing process engineering, EPCM and EPC services for small and medium sized oil and gas processing facilities worldwide.

The acquisition of Valerus FS, which is a US-based integrated oil and gas surface facility solutions provider, is expected to increase the company’s exposure to high value, open new markets for Kentz and increase its exposure to Latin American markets.

Kentz chief executive Christian Brown said the deal would provide the company with a significant presence in the US market.

The US-based firm reported EBITDA of $51.5 million in the year ended December 31st 2012, on revenue of $492.9 million. The outlook for Valerus FS remains positive, with 60 per cent of projected revenues for next year under contract.

To finance the loan, Kentz is expected to drawn down on a new $400 million loan, with the remaining balance coming from the company’s existing cash resources or a $160 million revolving loan facility.

However, the deal must first be approved by Kentz shareholders, who are expected to meet early next month. The company has already got the backing of its largest shareholder Kerbet Limited.