Canada's SNC-Lavalin to buy WS Atkins in C$3.6 billion deal

Canada's SNC-Lavalin to buy WS Atkins in C$3.6 billion deal”

MONTREAL-SNC-Lavalin Group Inc. announced April 20 that it has reached an agreement to acquire United Kingdom -based professional services firm WS Atkins plc for $3.6 billion.

"We believe it is extremely likely that Atkins is acquired, but we believe that there is still a prospect that shareholders hold out for a higher bid from SNC or that an interloper appears", the analyst said in a note.

The acquisition values Atkins' entire issued and to be issued ordinary share capital at approximately £2.1bn.

SNC-Lavalin says the acquisition will create a $9-billion professional services and project management giant with 53,000 employees that will "significantly improve" its margins and "further balance its business portfolio" in infrastructure, rail and nuclear sectors. The Atkins board approves the deal and is recommending shareholders accept.

A successful deal would strengthen SNC-Lavalin's foothold in Europe, which accounted for only 5.3 per cent of its sales past year, while Atkins generates nearly half its £1.862 billion annual revenue there, according to Bloomberg.

The transaction is expected to close in the third quarter of 2017.

"By combining two highly-complementary businesses, we will increase our depth and breadth of services to position us as a premier partner to public and private-sector clients", said SNC-Lavalin President & CEO Neil Bruce.

Current Atkins chief executive Uwe Krueger will step down and be replaced by current CFO Heath Drewett.

In its announcement, SNC-Lavalin does not expressly note layoffs, saying that Atkins' employees "will be a key factor in maximizing the opportunities that the acquisition will present", adding that the combined firms' executives "will also aim to retain the best talent across Atkins and SNC-Lavalin".

SNC-Lavalin expects to generate synergies of around $120 million by the end of the first full financial year. "Together, we will become part of a larger global organisation that will open the door to new opportunities for further growth and development".

The deal will also deepen SNC-Lavalin's project management, design, consulting, and engineering capabilities to create a more comprehensive end-to-end value chain for the combined entity - including capital investment, consulting, design, engineering, construction, sustaining capital and operations and maintenance.

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