Canada's SNC-Lavalin Group has finally reached an agreement with UK-based WS Atkins (Atkins) to acquire the company in a cash deal worth US$2.7 billion (CA$3.6 billion). OE previously reported in early April that the Canadian engineering firm was looking into a takeover of Atkins.
SNC-Lavalin will pay about $26.59 (£20.80) per share in cash, in which the deal has already been approved by the boards of directors of both companies. The deal is expected to close later this year.
“We are very pleased to announce this proposed acquisition that is fully aligned with our growth strategy, creating a global fully integrated professional services and project management company – including capital investment, consulting, design, engineering, construction, sustaining capital and operations and maintenance. 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,” says Neil Bruce, SNC-Lavalin president and CEO, who was previously COO at engineering group AMEC.
“It also creates new revenue growth opportunities in key geographies by positioning us to capitalize on increased cross-selling and the opportunity to win and deliver major projects in new regions.”
SNC-Lavalin says the deal will bring the company new and complementary capabilities in three of its four sectors, and with essentially no overlap in its service offering, with significant presence in Europe, UK, Scandinavia, the US, Middle East and Asia.
It also further reduces SNC-Lavalin’s business risk profile with ongoing revenue streams from framework and master service agreements for consulting and advisory services, as well as fixed fee consultancy and design projects.
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.
Consistent with the extensive succession planning work completed by Atkins and the Atkins Directors, 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. Drewett will report into SNC-Lavalin’s president and CEO and become a member of SNC-Lavalin’s executive committee.
James Cullens, group director Human Resources and Marcomms and executive director of Atkins, will remain with the combined entity and support SNC-Lavalin with key integration and people-related matters following the successful completion of the acquisition. Cullens’ extensive experience, both at Atkins and in his prior career, is aligned with the needs of the combined entity. It is therefore anticipated that, subject to mutual agreement, towards the end of the year, Cullens will assume the position of executive VP, Human Resources, for the combined organization.
The acquisition will create growth and expansion of services and revenue. It is also expected to deliver approximately CA$120 million in cost synergies in both current organizations by the end of the first full financial year after the effective date, that would include, for example eliminating corporate and listing costs, optimizing corporate functions and shared services, streamlining IT systems, and office consolidation where appropriate.
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