Canada’s SNC-Lavalin Group said it reached a CA$3.6 billion buyout agreement for UK’s engineering firm Atkins.
SNC-Lavalin will acquire the entire issued and to be issued share capital of Atkins for £20.80 per share in cash, the Canadian firm said in a statement.
Atkins is knowns for its consultancies in design, engineering and project management, in the infrastructure, transportation and energy sectors. With 18,000 employees and a revenue of approximately £2.0 billion in 2016, Atkins has presence in US, Middle East and Asia, along with United Kingdom and Scandinavia
“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 Neil Bruce, President and CEO of SNC-Lavalin.
Heath Drewett, the current group finance director and executive director of Atkins will, upon successful completion of the acquisition, be promoted to lead Atkins within the combined entity, SNC-Lavalin said.
The business rationale for the acquisition includes further reduction in the Canadian firm’s risk profit with ongoing revenue streams from framework and master service agreements for consulting and advisory services, as well as fixed fee consultancy and design projects.
It will also improve SNC-Lavalin’s overall margins by adding a significant amount of consistent comparatively high-margin revenue and significantly increase its global customer base, along with expand and deepen the areas of the market that the combined entity can service.
SNC-Lavalin expects to deliver approximately $120 million of cost synergies by the end of the first full financial year after the effective date of the acquisition.
The deal is the latest in a series of bids for UK companies by international companies taking advantage of the weak pound, with UK-targeted acquisitions at its second-highest level in eight years, according to Thomson Reuters.
It also represents a step towards the long anticipated consolidation of the global engineering sector. John Wood Group agreed to a £2.2 billion deal for engineering services company Amec Foster Wheeler last month, while SNC-Lavalin acquired UK-listed Kentz Corporation, the oil and gas services specialist, for £1.16 billion in 2014.
As part of the integration process, a review of the Atkins businesses will be completed with the Atkins leadership team to determine any organizational and structural changes that should be implemented to benefit the combined entity. SNC-Lavalin does not expect this integration review to have a material impact on the continued employment of Atkins’ employees.
The acquisition that is fully aligned with the company’s growth strategy of creating a global fully integrated professional services and project management company – including capital investment, consulting, design, engineering, construction, sustaining capital and operations and maintenance, Bruce said.
“It also creates new revenue growth opportunities in key geographies by positioning us to capitalise on increased cross-selling and the opportunity to win and deliver major projects in new regions.”