LONDON (Alliance News) - SNC-Lavalin Group Inc Monday said it has an agreed deal to buy oil and gas services engineering and construction company Kentz Corporation Ltd for GBP1.16 billion in cash, a deal that comes after AMEC PLC and Germany'sM+W Group GmbH failed to buy the British company last year.
In a joint statement, the companies said Montreal-based SNC-Lavalin will offer 935 pence per Kentz share, which represents a premium of 33% to the closing price on Friday. Kentz shares were quoted up 33.0% at 934.54 pence Monday morning.
FTSE 250-listed Kentz said it considers the terms to be fair and reasonable and will recommend that its shareholders approve the deal.
AMEC and M+W had made approaches to Kentz last summer, but walked away after their approaches were rejected. The highest bid for Kentz at that time came from AMEC, which valued the company at up to GBP684 million. Kentz's share price has risen 89% since M+W walked away on September 13, including the big jump in the stock price Monday.
"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," Kentz Chief Executive Christian Brown said in the statement.
SNC-Lavalin is an engineering and construction company. It has identified the resources sector as a key strategic growth market.
It said it expects annual cost synergies to be about CAD50 million by the end of the first financial year after the deal closes, through the elimination of Kentz's corporate and listing costs as well as operational synergies. It expects the deal to boost its earnings by the end of the first full financial year after the deal completes.
It will finance the acquisition using its existing cash resources and new credit facilities.
Kentz's business will be integrated into SNC-Lavalin's oil and gas businesses, and the combined operations will be managed by a leadership team selected from both companies, under the leadership of Kentz CEO Brown.