SNC-Lavalin bulks up energy business with $2 billion Kentz buy
By Euan Rocha and Susan Taylor
TORONTO (Reuters) - Canada's SNC-Lavalin Group Inc (SNC.TO: Quote) will buy resource-sector engineering group Kentz Corp KENZ.L in a 1.16 billion pound ($2 billion) deal that SNC said on Monday will accelerate its turnaround plan, including the sale of noncore assets.
SNC, Canada's biggest engineering and construction company, said the acquisition of the British company will help stabilize its business and expand its high-growth and high-margin operations in the oil and gas industry.
It said the takeover, which the boards of both companies have approved, will add to its earnings within the first full financial year after closing, and will boost its order backlog by C$4.9 billion ($4.5 billion) to about C$13 billion.
Montreal-based SNC's headcount will increase by about 14,500 to a total of 44,500 employees under the deal, with 18,500 in the oil and gas sector. That will allow it to undertake larger, more complex projects and boost its presence in higher-growth regions such as the Middle East, North America and Asia Pacific, the company said.
Since becoming SNC's chief executive in 2012, Robert Card has sought to stabilize the company, which was rocked by a far-reaching misconduct scandal earlier that year that was rife with allegations of bribery and fraud.
In an interview with Reuters on Monday, Card said SNC is keen on the oil and gas sector, and may do smaller bolt-on deals that fill specific technical or geographic niches. "We have some building blocks in mind," he said.
Citing increased confidence, SNC said it now expects to sell its 16.8 stake in Toronto's 407 toll highway earlier than it had expected. It had indicated it was looking at a sale within a one- to three-year period.
Canada Pension Plan Investment Board (CPPIB), which manages the national pension fund and owns a 40 percent stake in Highway 407, said it is keen on any transaction involving the asset. Continued...