February 20, 2012 / 8:28 PM / 6 years ago

UPDATE 3-URS to buy Flint Energy for C$1.25 bln

* Flint shareholders will get C$25/share; a 68 pct premium
to Friday close
    * URS would also assume C$225 mln in Flint debt
    * URS expects deal to add $0.20-$0.30 a share to FY earnings
    * Sees cost synergies of $10 mln-$15 mln in 2012

    By Himank Sharma and Supantha Mukherjee	
    Feb 20 (Reuters) - U.S. engineering company URS Corp
 will buy Canadian oilfield services company Flint Energy
Services for C$1.25 billion (US$1.25 billion) in cash,
to expand its presence in the oil and gas sector. 	
    Under the deal unanimously approved by the two companies'
boards, Flint shareholders will get C$25 a share -- a 68 percent
premium over the stock's Friday close.	
    URS would also assume C$225 million in Flint debt as part of
the transaction, the companies said in a joint statement.	
    San Francisco-based URS designs bridges and roads and the
deal expands the company's presence in designing equipment and
systems needed for extracting natural gas and oil from
unconventional sources such as sand. URS' revenues from the oil
and gas sector will increase to about 22 percent of total
revenues following the transaction, the company said.	
    "Through this combination, URS will be well positioned in
segments of the oil and gas industry that we expect to have
attractive margins and growth rates," URS Chief Executive Martin
Koffel said in a statement.	
    The company, which competes with Jacobs Engineering Group
Inc and Fluor Corp, expects the deal to add
20-30 cents a share to its full-year earnings.	
    URS expects 2012 revenue of $9.9 billion-$10.1 billion and a
profit of $3.95-$4.05 per share on a standalone basis.	
    Calgary, Alberta-based Flint, which has about 10,000
employees, gets about 80 percent of its revenue from Canada and
the rest from the United States. 	
    In November last year, Flint said it expects its drilling
activity in Canada and the United States to rise 10 percent and
12 percent, respectively, in 2012. 	
    URS, which has about 47,000 employees, expects pre-tax cost
synergies of $10 million to $15 million in 2012 from the deal.	
    The deal will need to be implemented through a
court-approved Plan of Arrangement under Canadian law and is
subject to the approval of Flint security holders, relevant
regulatory approvals and other customary closing conditions.	
    URS expects to fund the deal using existing credit facility
and a financing commitment for a new bridge facility.	
    After closing the deal, Flint will become a new division of
URS, led by Flint's Chief Executive William Lingard.	
    In the event of a better offer by another suitor, URS will
have a five-business-day right to match the offer. If the deal
is not completed as a result of the offer, Flint has agreed to
pay URS a termination fee equal to C$42 million. 	
    Morgan Stanley & Co LLC acted as financial adviser and
Osler, Hoskin & Harcourt LLP served as Canadian legal counsel
for URS. Credit Suisse Securities (Canada) Inc was the financial
adviser to Flint and Bennett Jones LLP served as legal counsel.	
    URS shares closed at $42.91 on Friday on the New York Stock
Exchange. Flint shares closed at C$14.90 on Friday on the
Toronto Stock Exchange.
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