SNC-Lavalin to acquire WS Atkins

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SNC-Lavalin to acquire WS Atkins

SNC-Lavalin Group Inc. has announced that it has reached an agreement with WS Atkins plc, approved by the boards of directors of both companies, on the terms of a cash acquisition by which SNC-Lavalin will acquire the entire issued and to be issued share capital of Atkins for £20.8 (US$22.3) per share in cash, representing an aggregate cash consideration of CAD3.6 billion (US$2.7 billion).

The acquisition represents an enterprise value of CAD4.2 billion (US$3.11 billion), including the pension deficit. This represents an estimated purchase price multiple of 9.8x for the 12-month adjusted EBITDA post synergies and including pension deficit.

The acquisition is expected to be immediately accretive to SNC-Lavalin’s consolidated and E&C adjusted earnings per share before any revenue and cost synergies.

The acquisition will create growth and expansion of services and revenue. It is also expected to deliver approximately CAD120 million (US$88.9 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.

The acquisition financing structure preserves SNC-Lavalin’s balance sheet strength and leverages SNC-Lavalin’s equity stake in the Highway 407 ETR, while retaining its equity ownership. The acquisition will be funded through a combination of equity and debt issuance, and supported by Caisse de dépôt et placement du Québec (CDPQ), SNC-Lavalin’s largest shareholder. The funding includes a CAD1.5 billion (US$1.11 billion) loan from CDPQ, an CAD800 million (US$592.4 million) public bought deal offering, a CAD400 million (US$296.2 million) private placement with CDPQ, as well as a £300 million (US$384 million) term loan, and an approximately £350 million (US$448 million) draw on our current credit facility.

Additionally, SNC-Lavalin expects to maintain its investment-grade rating following the closing of the acquisition. RBC Capital Markets is acting as financial adviser and corporate broker to SNC-Lavalin. SNC-Lavalin’s legal adviser is Norton Rose Fulbright. SNC-Lavalin’s accountants are Deloitte LLP. Maitland acted as financial communications consultants.

Neil Bruce, President & CEO, said:

“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.

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. I look forward to welcoming Atkins’ employees into our combined company. Together, we will become part of a larger global organization that will open the door to new opportunities for further growth and development.”

Headquartered in the UK, Atkins is a consultancy in design, engineering and project management, with a leadership position across the infrastructure, transportation and energy sectors. Tracing its roots back to 1938, Atkins today has 18,000 employees with revenues of approximately £2.0 billion (US$2.56 billion) in 2016, and is geographically diversified in the US, Middle East and Asia, together with an important position in the UK and Scandinavia.

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