Canada’s largest engineering firm, SNC-Lavalin Group Inc., has said that it will buy Kentz Corp. in a USD 1.97 billion deal. This agreement is expected to expand the former’s footprint in the oil industry.
The firm, based in Montreal, will pay a per-share price of 935 pence, which marks a 33% premium to the last week’s closing price, according to a statement issued by the company. Reports state that Kentz’s board recommended this offer to the company’s shareholders.
SNC-Lavalin will be using cash and new credit to fund this deal. The company’s officials said that the gas and oil present a higher growth prospectus as compared to any other infrastructure investment. The company expects that this new acquisition will contribute to its earnings starting from the first year. In 2013, the company had considered bidding for Kentz as the price per share was lower than 500 pence.
The CEO of SNC-Lavalin said that his company has been tracking every possible combination, and over the recent past, has deliberated on its emphasis on gas and oil. But these deliberations yielded the same answers, prompting the company to go ahead with the purchase of Kentz. He said that his company was looking for top talent in the market, and was not ‘bottom-fishing.’ As news of the deal became official, the price per-share of Kentz saw a 34% spike in London.
In 2013, Kentz was approached by other engineering companies including Amec Plc, whose proposal was turned down for being too sluggish. Kentz was established in 1919, and today has an employee-strength of 14,500 across 36 countries.