Engineering firm Kentz to be sold for €1.5 billion
Shareholders unanimously back cash offer for Tipperary-based engineering group
Kentz’s shares were trading at 930 pence in early trading on Monday following the announcement.
Canada’s largest engineering and construction company SNC-Lavalin is to acquire Tipperary-based Kentz for $1.16 billion (€1.45 billion) in cash.
SNC-Lavalin said Kentz shareholders will receive 935 pence per share, a premium of 33 percent to the group’s Friday close on the London Stock Exchange.
The acquisition is expected to be earnings accretive by the end of the first full financial year and to deliver strong financial benefits, including estimated annual cost synergies of approximately CAD$50 million (€34 million) for the same period.
The group, which specialises in helping larger industrial customers to develop oilfields and gasfields, said the cash offer had received unanimous support from board members.
“We feel that the offer recognises the value of our future prospects, world-class client base, and our excellent people; the ultimate assets of our business,” said Kentz chief executive Christian Brown
“Although the board of Kentz believes the company has a strong future as an independent business, it considers that this cash offer substantially recognises the company’s growth prospects, providing certainty, in cash, to Kentz shareholders today,” he added.
Kentz had come close to a sale last year. Germany’s M+W Group and British rival Amec submitted offers for the company early in 2013, but both were rejected.
Commenting on the benefits of the acquisition for SNC-Lavalin, the company’s president and chief executive Robert G Card said the deal would also give it a much greater presence in key growth regions such as the Middle East, North America and Asia Pacific.
“The proposed acquisition of Kentz is consistent with SNC-Lavalin’s strategy of becoming a global Tier-1 engineering and construction company, with a leading position in the oil and gas sector,” he said.
The company was said to have first looked at buying Kentz last year, when the share price was less than 500 pence.
“We’ve tracked every conceivable combination that we could think of and constantly questioned our emphasis on oil and gas, and it kept coming back to the same answers,” said Mr Card. “We’re not bottom fishing in the market. We’re looking for top quality.”
In an interim management statement issued last month, Kentz said its order backlog had increased to record levels and that it expected 2014 to be a year of considerable revenue growth for the group.
Kentz said its backlog at the end of April was $4.5 billion, as against $3.1 billion at the end of December and $2.8 billion for the same month a year earlier.
It added that its order intake stood at $1.8 billion in April 2014, as against $1.7 billion last year. Kentz also said its prospect pipeline rose to $16.3 billion from January to April, compared to $15.6 billion in December and $13.7 billion for April 2014.
Kentz rallied 32 percent to close at 929 pence.
Additional reporting: Agencies