MONTREAL—Canadian engineering giant SNC-Lavalin Inc. has reached an agreement to buy United Kingdom-based oil and gas services firm Kentz Corp. Ltd. in a $2.1-billion cash deal.
According to SNC-Lavalin, the boards of both companies have agreed to terms of the deal that will see the Montreal-based firm acquire all outstanding shares of Kentz at a price of $17.13, a 33 per cent premium over the June 20 closing price.
The deal comes after the company denied last year it was mulling the idea of buying Kentz.
“We look forward to adding Kentz to our group and significantly strengthening our capabilities in the oil and gas sector,” SNC-Lavalin president and chief executive Robert Card said in a statement.
“We are excited by the prospect of merging the excellent capabilities of our two oil and gas teams under the leadership of Christian Brown, Kentz’s CEO, which will create a world-class team inside of SNC-Lavalin to better serve our combined clients worldwide.”
Kentz employs 14,500 people and has operations in 36 countries.
The acquisition aligns with SNC-Lavalin’s strategy of becoming a top-tiered global engineering and construction services firm, and particularly in the oil and gas sector “key growth regions,” including North America, the Middle East and Asia Pacific.
The deal will is expected to raise the company’s revenue share from oil and gas operations from about seven per cent to approximately 24 per cent.
According to SNC-Lavalin, the deal will push its employee numbers to a combined 44,500, with 18,500 people working in its oil and gas operations.
The deal is expected to be completed in the third quarter of 2014.