Canada's SNC-Lavalin Group Inc (TSE:SNC) has reached an agreement to buy WS Atkins Plc (LON:ATK), the UK-based engineering and project management consultancy with presence in renewables and future energies.
"On behalf of our board I am pleased to announce SNC-Lavalin's recommended cash offer to our shareholders", said chairman Allan Cook.
The Montreal firm, which had until May 1 to finalize its offer made on April 3, would benefit from Atkins' broader exposure to US and United Kingdom infrastructure markets and being able to move away from oil-and-gas work, while the British firm would gain size to bid larger projects. It has been agreed by the boards of directors of both organisations on the basis that no final dividend for the financial year ended 31 March 2017 will be paid by Atkins to its shareholders.
SNC-Lavalin's largest shareholder, The Caisse de depot, will provide $400 million through the private purchase of equity and a $1.5-billion non-recourse loan secured by its interest in Highway 407 near Toronto.
The deal, expected to close in the third-quarter, will enhance SNC-Lavalin's size by boosting annual revenues to $12.1 billion and increasing employee numbers to 53,000. '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'.
SNC said it expects the deal to generate about $120 million in cost savings.
Founded by Sir William Atkins in 1938, Atkins is a multinational engineering, design, planning, architectural design, project management and consulting services company.
A successful deal would strengthen SNC-Lavalin's foothold in Europe, which accounted for only 5.3 per cent of its sales previous year, while Atkins generates nearly half its £1.862 billion annual revenue there, according to Bloomberg. "Together, we will become part of a larger global organization that will open the door to new opportunities for further growth and development".