£800m takeover linked to Kentz

Clonmel-founded engineering group Kentz is subject to takeover speculation linking British engineer Amec to an £800m (€938m) bid as Amec attempts to grow its oil and gas division.

Amec, which provides services and equipment for the oil and gas, mining, nuclear and renewable energy sectors, approached Kentz in July over a potential deal, the Mail on Sunday newspaper reported without naming the source.

Germany-based M+W Group have also shown an interest, the report said.

A source familiar with the situation said any potential deal was likely to be significantly lower than the reported 700p a share figure.

Amec told reporters at the start of the month it was looking to make acquisitions in the second half in the oil and gas sector, and if no deals were forthcoming it would consider a cash return for shareholders.

Kentz, a FTSE 250 company with a market cap of £561m, listed in 2008 and has grown rapidly into a diversified construction company with mining, oil and gas, and infrastructure projects all over the globe.

Kentz and Amec both declined to comment on the report.

Earlier in the year Kentz reported that it was in a much better position than many of its competitors with a strong pipeline of work and healthy cash reserves.

The company — which specialises in providing infrastructural support services for major oil and gas exploration companies around the world — also said in July that its backlog of business rose by 9% in the first five months of this year — covering nearly $3bn worth of contracts — with around 80% of that work classed as reimbursable contracts.

Its most recent work win came, last month, via a $100m contract to build support structures for a major gas exploration project in Australia.

Kentz chief executive Christian Brown said that the company is more optimistic than many of its peers, regarding its short-term future prospects.

“We’re very pleased with the progress we’ve made during the first half of 2013. Our future growth plans are underpinned by the continued expansion of our global footprint, the strengthening of existing client relationships and our success in winning work with new clients.”

Mr Brown added that: “Despite a cautious outlook from some of our peers in the services industry, our broad range of services has provided us with the opportunities to continue and grow our pipeline and backlog since December. We remain confident of achieving our target of delivering double-digit earnings growth in 2013.”

Additional reporting by Reuters.