Kentz’ Irish executives in line for big payouts if bidding war leads to a sale

The two main potential bidders for Kentz, a Tipperary-based listed engineering company that has received a number of unsolicited takeover approaches, have until September 16th to make a binding offer, or else they must walk away.

 

Amec, a British rival of Kentz, and the German M+W Group both confirmed yesterday that they had made approaches about a possible buyout of Kentz, which has rebuffed them.

The Irish Times understands that earlier reports of a third bid, by SNC-Lavalin were incorrect, although it could yet get dragged into the bidding war.

The bids value the Clonmel-headquartered company at about £700 million (€820 million).

Some of Kentz’s senior Irish-based executives stand to receive large payouts if the company is sold at this level.

Ed Power, the company’s Waterford-educated chief financial officer, has a stake in the company of just under 0.9 per cent, and would be in line for a payment of about £6 million.

Company undervalued
Kentz, which specialises in helping larger industrial customers to develop oilfields and gasfields, mines and other factory sites, said yesterday that approaches made by both suitors undervalued the company.

Kentz confirmed its board had unanimously rejected a proposed offer made by Amec, the FTSE 100 oil services and engineering group, on August 5th. This was pitched at between 565p and 580p a share, and followed an approach made in July. The company, which is expected to report a gross cash position of about $220 million and an order backlog of $2.8 billion when it delivers interim results next Tuesday, also said that it had rejected a lower indicative approach made in July by Stuttgart company M+W Group.

The German group is owned by Stumpf, an Austrian industrial and real estate conglomerate, and last year generated an order intake of €3.58 billion and revenues of €2.38 billion. Shares in Kentz jumped more than a fifth to close at 589.5p.

Kentz began life in 1919 as a local electrical contractor in Tipperary. It relaunched itself as an international oil services group in the 1970s.

After a financial collapse and restructuring that attracted backing from Malaysian investors in the 1990s, the company floated on the Aim in London in 2008 before progressing to London’s main list in 2011.

The company told The Irish Times that Irish shareholders still account for about 1.5 per cent of its investor base. Kentz has 14,500 employees in 30 countries, including about 60 in Tipperary, where its main administrative base is located.


Footprint in growth regions
Yesterday Amec said that its offer for Kentz was good value for its investors, adding that a takeover of Kentz would help to extend Amec’s footprint in growth regions “and enhance Amec’s position in two of its core markets: oil and gas and mining”.

Amec chief executive Samir Brikho said at the company’s interim results this month that it was considering a range of takeover targets as it ended the half-year with a record order book of £3.9 billion and net cash of £290 million.

Amec played down the chances of a much-improved approach, stating that it “takes a disciplined approach to acquisitions”.

– (Additional reporting The Financial Times 2013)