Kentz sells for €1.45bn to SNC

Canadian engineering and construction company SNC-Lavalin Group said yesterday that it would acquire Tipperary-based energy services provider Kentz Corp for about £1.164bn (€1.45bn) in cash to expand its offerings in the oil and gas sector.

Montreal-based SNC said the acquisition would allow it to carry out larger and more complex oil and gas projects.

The deal would also give SNC a much greater presence in key growth regions such as the Middle East, North America and Asia Pacific.

SNC-Lavalin said each Kentz shareholders would receive 935 pence per share, a premium of 33% to the stock’s Friday close on the London Stock Exchange.

Since it went public in 2008, Kentz, a FTSE 250 company, has grown rapidly into a diversified construction company with mining, oil and gas, and infrastructure projects around the world.

The company had come close to a sale last year. Germany’s M+W Group and British rival Amec submitted offers for Kentz early in 2013, but both were rejected. Amec’s bid of £680m was substantially lower than SNC’s.

Amec earlier this year struck a deal to acquire Swiss-based rival Foster Wheeler for £1.9bn.

SNC said it expected the Kentz deal to add to earnings within the first full financial year after closing and to raise its order backlog by about C$4.9bn (€3.35bn) to about C$13bn.

The boards of both companies have unanimously approved the deal.

The takeover will increase SNC-Lavalin’s employee headcount by about 14,500, creating a combined company of about 44,500, with 18,500 dedicated to the oil and gas sector.

SNC said the acquisition would reduce its risks by raising the portion of annual revenue it derives from services contracts to about 40% from about 34%.