Canada's SNC-Lavalin is set to buy UK engineering firm WS Atkins in £2.1bn deal

 
Courtney Goldsmith
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WS Atkins surged after the takeover approach earlier this month (Source: Getty)

Canadian engineering and construction company SNC-Lavalin Group will acquire UK engineering consultant WS Atkins in a deal valued at about CA$3.6bn (£2.1bn).

SNC offered 2,080p per Atkins share in cash, representing a 35.1 per cent premium to the stock's closing price on 31 March, before Atkins first disclosed the buyout offer.

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Neil Bruce, president and chief executive of SNC-Lavalin, said the acquisition is fully in line with the group's growth strategy and will create a global fully integrated professional services and project management company.

"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 capitalise on increased cross-selling and the opportunity to win and deliver major projects in new regions."

Allan Cook, chair of Atkins, said: "We believe that the offer from SNC-Lavalin represents an attractive and certain value in cash today for Atkins shareholders reflecting the high quality of the business, its people and its future prospects. The board of Atkins believes that a combination will provide clear benefits to our shareholders, enhanced opportunities for our employees as part of a larger group, and a broader service offering for our customers.”

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Canadian pension fund Caisse de depot et placement du Quebec (CDPQ), SNC's biggest shareholder, will extend a loan of $1.5bn to SNC and buy $400m of equity in SNC-Lavalin, to help finance the acquisition.

The loan will be secured by the value and cash flows of SNC-Lavalin's interest in the Highway 407 ETR project in Ontario, CDPQ said separately on Thursday.

SNC's funding will also include an $800m public bought-deal offering, the company said.

SNC said it expects the deal to generate about $120m in cost savings.

The transaction is expected to close in the third quarter of 2017.

Read more: WS Atkins shares rocket on news of £2.1bn takeover approach