MONTREAL, July 5, 2017 /PRNewswire/ -- SNC-Lavalin Group
Inc. (TSX: SNC) ("SNC-Lavalin" or the "Corporation") is pleased to
announce that it has completed its acquisition of WS Atkins plc
("Atkins"), one of the world's most respected consultancies in
design, engineering and project management, with a leadership
position across the infrastructure, transportation and energy
sectors. Headquartered in the UK, Atkins is a geographically
diversified global company with approximately 18,000 employees in
the US, Middle East and
Asia, together with a leading
position in the UK and Scandinavia.
"SNC-Lavalin is continuing to deliver on its strategy of
establishing itself in the top 3 in our industry globally. By
combining our two highly complementary businesses, we are
solidifying SNC-Lavalin's position as one of the largest fully
integrated professional services firms in the world, while
improving our margins and balancing our business portfolio," said
Neil Bruce, President & CEO. "We
are now a true global player that is in a stronger position to
offer clients complementary and a wider breadth of expertise,
capabilities and services. We are thrilled to welcome the employees
of Atkins and the tremendous talent they will bring to our combined
company. Together, we will become part of a larger global
organization that will open the door to new opportunities for
further growth and development."
The acquisition of Atkins creates a global fully integrated
professional services and project management company – including
capital investment, consulting, design, engineering, construction,
sustaining capital and operations and maintenance. Together, we
will have over 50,000 employees and annual revenues of
approximately C$12
billion1. This acquisition increases our customer
base, geographic reach and scale, making us a true global player
with more balanced revenue coverage worldwide, while strengthening
our position globally to develop and capitalize on the
infrastructure, rail & transit, nuclear and renewables
markets.
The acquisition is expected to improve SNC-Lavalin's quality of
earnings, adding approximately C$3.5
billion1 of consistent comparatively high-margin
revenue, with ongoing revenue from framework and master service
agreements, providing long-term repeat business. It further reduces
our business risk profile and is expected to improve overall
margins, as Atkins operates a consultancy business model, adds a
significant amount of reimbursable projects, and fixed-price lump
sum contracts do not carry any procurement or construction
risk.
Heath Drewett, Group Finance
Director and Executive Director of Atkins, now becomes President of
Atkins, SNC-Lavalin's fifth business sector, and a member of
SNC-Lavalin's executive committee, reporting directly to
Neil Bruce.
"Joining SNC-Lavalin will provide us with the ability to
offer our clients and employees the enhanced scale, capabilities,
expertise and other benefits that come with being part of a larger
and stronger global company," said Heath
Drewett, President of Atkins. "At the same time, we look
forward to bringing our own unique project management,
design, consulting and engineering capabilities to SNC-Lavalin's
clients. The result will be a more agile and responsive company
that better meets client needs and creates cross-selling
opportunities."
Over the coming months, teams from both organizations will work
together to integrate both companies in order to create value for
all stakeholders and realize expected synergies from the
acquisition. SNC-Lavalin has a strong record of successful
integrations and is committed to leveraging the best practices from
each organization to ensure that the two companies are combined
with speed, diligence and efficiency.
The acquisition is expected to deliver approximately
C$120 million in cost synergies –
approximately C$30 million from
SNC-Lavalin and C$90 million from
Atkins – by the end of the first full financial year. These
synergies would mainly include eliminating corporate and listing
costs, optimizing corporate and back-office functions and shared
services, streamlining IT systems, and real estate consolidation
where appropriate.
As previously announced by Atkins, Atkins shareholders voted in
favour of the acquisition at a meeting convened by order of the
High Court of Justice in England
and Wales (the "Court") and a
general meeting, both held on June 26,
2017. The acquisition was structured as a scheme of
arrangement and the Court sanctioned the scheme on June 29, 2017. Following the sanction of the
Court, the acquisition became effective in accordance with its
terms on July 3, 2017 (the "Effective
Date").
Acquisition Financing Update
The aggregate cash consideration for the acquisition of £20.80
per Atkins share in cash for a total consideration of approximately
C$3.6 billion* was financed using the
net proceeds from the Corporation's previously announced
C$880 million public bought deal
offering of subscription receipts completed through a syndicate of
underwriters; a C$400 million
concurrent private placement of subscription receipts with the
Caisse de dépôt et placement du Québec (the "Caisse"); a
C$1.5 billion loan2 from
the Caisse to SNC-Lavalin Highway Holdings Inc. (the entity that
holds SNC-Lavalin's 16.77% interest in Highway 407ETR through 407
International Inc.); a new £300 million unsecured term loan with a
syndicate of North American banks as well as approximately £200
million drawn under the Corporation's existing syndicated credit
facility.
With the closing of the acquisition now effective, each
subscription receipt will be exchanged for one common share in the
capital of the Corporation (each, a "Common Share") without
additional consideration and without further action by the holders
of subscription receipts. Holders of subscription receipts are also
entitled to receive a cash amount for each subscription receipt
equivalent to the dividend paid by the Corporation on each Common
Share on June 1, 2017, less any
applicable withholding taxes.
SNC-Lavalin expects that trading in the subscription receipts
will be halted from the Toronto Stock Exchange (the "TSX") before
the opening of the market on July 4,
2017, that the transfer register maintained by the
subscription receipt agent will be closed and that the subscription
receipts will be delisted by the TSX after close of business on
July 4, 2017. Trading on the TSX of
the underlying Common Shares is expected to begin at the opening of
the market on July 4, 2017.
It is expected that settlement of the consideration to which the
relevant Atkins shareholders are entitled will be effected not
later than 14 days after the Effective Date, in accordance with the
terms of the scheme of arrangement.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy securities in any jurisdiction nor
will there be any sale of these securities in any province, state
or jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such province, state or jurisdiction. This
press release does not constitute an offer to sell or the
solicitation to buy securities in the
United States. The securities mentioned herein have not been
and will not be registered under the U.S. Securities Act of
1933, as amended, and may not be offered or sold in
the United States absent
registration or an applicable exemption from registration
requirements.
1Pro forma financials for the financial year ended
December 31, 2016 based on
SNC-Lavalin fiscal year ended December 31,
2016 and Atkins twelve month period ended September 30, 2016.
2This loan is secured by the full value of
SNC-Lavalin Highway Holdings' shares in Highway 407 and the cash
flows generated from such shares.
* Based on the offer price of £20.80 per Atkins share,
multiplied by 100,110,799 Atkins shares in issue (excluding
4,341,000 ordinary shares held in treasury) as specified in the
Rule 2.9 announcement published by Atkins on April 3, 2017 and by the GBP: CAD exchange rate
of 1.7229 (as of 5.00 p.m. U.K. time
on April 19, 2017 as per
Bloomberg).
FORWARD-LOOKING STATEMENTS
This press release contains statements that are or may be
"forward looking statements" or "forward looking information"
within the meaning of applicable Canadian securities laws,
including those regarding the expected impact of the acquisition on
SNC-Lavalin's strategic and operational plans and financial
results. Statements made in this press release that describe
SNC-Lavalin's or management's expectations, objectives,
predictions, projections of the future or strategies may be
"forward-looking statements", which can be identified by the use of
the conditional or forward-looking terminology such as "assumes",
"believes", "continue", "could", "estimates", "expects", "intends",
"may", "should", "strategy", "will", "would", the negative thereof,
other variations thereon or similar terminology, as they relate to
SNC-Lavalin, Atkins or the combined entity. Forward-looking
statements also include any other statements that do not refer to
historical facts. Forward-looking statements also include, but are
not limited to, future capital expenditures, revenues, expenses,
earnings, economic performance, cash flows, indebtedness, financial
condition, losses and future prospects; and business and management
strategies and expansion and growth prospects of SNC-Lavalin's and
the combined entity's operations. The pro forma information set
forth in this press release should not be considered to be what the
actual financial position or other results of operations would have
necessarily been had the acquisition been completed as, at, or for
the periods stated. All such forward-looking statements are made
pursuant to the "safe-harbour" provisions of applicable Canadian
securities laws. SNC-Lavalin cautions that, by their nature,
forward-looking statements involve known and unknown risks and
uncertainties, and that its actual actions and/or results could
differ materially from those expressed or implied in such
forward-looking statements, or could affect the extent to which a
particular projection materializes. Forward-looking statements are
presented for the purpose of assisting investors and others in
understanding certain key elements of SNC-Lavalin's current
objectives, strategic priorities, expectations and plans, and in
obtaining a better understanding of SNC-Lavalin's business and
anticipated operating environment. Readers are cautioned that such
information may not be appropriate for other purposes.
This press release also contains forward-looking statements with
respect to: expected SNC-Lavalin financial performance;
SNC-Lavalin's business model and overall strategy; the settlement
of the consideration to Atkins shareholders and the timing thereof;
anticipated benefits of the acquisition (including the impact of
the acquisition on SNC-Lavalin's size, operations, infrastructure,
expertise, capabilities, development, growth and other
opportunities, customer base, geographic reach, scale, business
portfolio, market position, financial condition, revenue coverage,
and risk profile); expectations regarding accretion and
contribution to earnings, margins and revenues and overall quality
thereof, the addition of consistent high-margin revenues, and
margin expansion; the ability of the combined entity to develop and
capitalize on the infrastructure, rail & transit, nuclear and
renewables markets; expected growth and development opportunities
associated with Atkins' business and the combined entity; the
ability of the combined entity to maintain long-term, repeat
business and to better meet client needs and create cross-selling
opportunities; the ability of SNC-Lavalin to deliver on its
strategy of establishing itself in the top 3 in the industry
globally and to create a global, fully integrated professional
services and project management company; the leveraging of
respective core competencies and strategies, the retention and role
of Atkins employees and the holding of significant roles for
existing Atkins management; the growth of the employee base of the
combined entity and the value and capabilities of such employees;
expectations regarding the strength, complementarity and
compatibility of Atkins with SNC-Lavalin's existing business and
management teams; expectations regarding the integration of
SNC-Lavalin and Atkins and efficiency and timing thereof; and
expectations regarding anticipated cost savings and cost synergies
resulting from the acquisition, and the manner of achieving such
synergies.
Although SNC-Lavalin believes that the expectations, opinions,
projections, and comments reflected in these forward-looking
statements are reasonable and appropriate, it can give no assurance
that such statements will prove to be correct. The assumptions are
set out throughout SNC-Lavalin's 2016 Management's Discussion and
Analysis filed with the securities regulatory authorities in
Canada, available on SEDAR at
www.sedar.com or on SNC-Lavalin's website at www.snclavalin.com
under the "Investors" section (the "MD&A") (particularly, in
the sections entitled "Critical Accounting Judgments and Key
Sources of Estimation Uncertainty" and "How We Analyze and Report
our Results") and, in relation to the acquisition, include the
following material assumptions: the maintenance of SNC-Lavalin's
investment grade credit rating; the successful and timely
integration of SNC-Lavalin and Atkins and the realization of the
anticipated benefits and synergies of the acquisition to
SNC-Lavalin in the timeframe anticipated, including impacts on
growth and accretion in various financial metrics; the ability of
the combined entity to retain key employees of Atkins and its
subsidiaries, and the value of such key employees; the realization
of expected GDP growth rates in global infrastructure investments,
the continued need for significant upgrading of ageing
infrastructure in the U.S. and expected wave of large scale
infrastructure projects globally; the ability of SNC-Lavalin to
satisfy its liabilities and meet its debt service obligations
following completion of the acquisition, and to continue servicing
Atkins' pension deficit; the ability of SNC-Lavalin to access the
capital markets following the acquisition; the absence of
significant undisclosed costs or liabilities associated with the
acquisition; the accuracy and completeness of Atkins' public and
other disclosure; the absence of significant changes in foreign
currency exchange rates or significant variability in interest
rates; the ability to hedge exposures to fluctuations in interest
rates and foreign exchange rates; no material adverse regulatory
decisions being received and the expectation of regulatory
stability; no significant operational disruptions or liability due
to a catastrophic event or environmental upset caused by severe
weather, other acts of nature or other major events; no severe and
prolonged downturn in economic conditions; sufficient liquidity and
capital resources; the continuation of observed weather patterns
and trends; no significant counterparty defaults; the continued
availability of industry-leading design, consulting and high-end
engineering professionals; the absence of significant changes in
taxation and environmental laws and regulations that may materially
negatively affect the operations and cash flows of the combined
entity; no material change in public policies and directions by
governments that could materially negatively affect the combined
entity; the maintenance of adequate insurance coverage; the ability
to obtain and maintain licences and permits; and no material
changes in market conditions.
If these assumptions are inaccurate, SNC-Lavalin's, Atkins' or
the combined entity's actual results could differ materially from
those expressed or implied in such forward-looking statements. In
addition, important risk factors could cause SNC-Lavalin's, Atkins'
or the combined entity's assumptions and estimates to be inaccurate
and actual results or events to differ materially from those
expressed in or implied by these forward-looking statements. These
risks include, but are not limited to, those described under the
sections "Risks and Uncertainties", "How We Analyze and Report Our
Results" and "Critical Accounting Judgments and Key Sources of
Estimation Uncertainty" in the MD&A and, with respect to the
acquisition discussed herein specifically, potential risks include:
increased indebtedness of SNC-Lavalin after the closing of the
acquisition; the failure by SNC-Lavalin to satisfy its liabilities
and meet its debt service obligations following completion of the
acquisition or to continue servicing Atkins' pension deficit; the
failure or delay in providing settlement of the consideration to
Atkins shareholders; the risk that the acquisition could result in
a downgrade of SNC-Lavalin's credit ratings; potential undisclosed
costs or liabilities associated with the acquisition, which may be
significant; impact of acquisition-related expenses; inaccurate or
incomplete Atkins publicly disclosed information; historical and
pro forma combined financial information may not be representative
of future performance; the failure to retain Atkins' personnel and
clients following the acquisition and risks associated with the
loss and ongoing replacement of key personnel; the impact of the
acquisition on SNC-Lavalin's and Atkins' relationships with third
parties, including commercial counterparties, employees and
competitors, strategic relationships, operating results and
businesses generally; the failure to realize, in the timeframe
anticipated or at all, the anticipated benefits and synergies of
the acquisition, including without limitation revenue growth,
anticipated cost savings or operating efficiencies and operational,
competitive and cost synergies; the possibility that SNC-Lavalin's
integration plan for Atkins could be ill-conceived or poorly
executed and result in loss of customers, employees, suppliers or
other benefits and goodwill of the Atkins business; factors
relating to the integration of SNC-Lavalin and Atkins (such as the
impact of significant demands placed on SNC-Lavalin and Atkins as a
result of the acquisition, the time and resources required to
integrate both businesses, diversion of management time on
integration-related issues, unanticipated costs of integration in
connection with the acquisition, including operating costs or
business disruption being greater than expected, and the
difficulties and delays associated with such integration); and
exchange rate risk and foreign currency exposure risk.
SNC-Lavalin cautions that the foregoing list of factors is not
exhaustive. Other risks and uncertainties not presently known to
SNC-Lavalin and Atkins or that SNC-Lavalin and Atkins presently
believe are not material could also cause actual results or events
to differ materially from those expressed in its forward-looking
statements. Accordingly, there can be no assurance that the
anticipated strategic benefits and operational, competitive and
cost synergies will be realized in their entirety, in part or at
all.
The forward-looking statements contained in this press release
are expressly qualified in their entirety by the foregoing
cautionary statements. The forward-looking statements herein
reflect SNC-Lavalin's expectations as at the date hereof, and are
subject to change after this date. SNC-Lavalin does not undertake
any obligation to update publicly or to revise any such
forward-looking statements whether as a result of new information,
future events or otherwise, unless required by applicable
legislation or regulation. All subsequent oral or written forward
looking statements attributable to SNC-Lavalin or any of its
directors, officers or employees or any persons acting on their
behalf are expressly qualified in their entirety by the cautionary
statement above.
Financial outlook information contained in this press release
about prospective results of operations, financial position or cash
flows is based on assumptions about future events, including
economic conditions and proposed courses of action, based on
management's assessment of the relevant information available as of
the date of this press release. Readers are cautioned that such
financial outlook information contained in this press release
should not be used for the purposes other than for which it is
disclosed herein or therein, as the case may be.
About SNC-Lavalin
Founded in 1911, SNC-Lavalin is a global fully integrated
professional services and project management company and a major
player in the ownership of infrastructure. From offices around the
world, SNC-Lavalin's employees are proud to build what matters. Our
teams provide comprehensive end-to-end project solutions –
including capital investment, consulting, design, engineering,
construction, sustaining capital and operations and maintenance –
to clients in oil and gas, mining and metallurgy, infrastructure
and power. www.snclavalin.com
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SOURCE WS Atkins