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WS Atkins in the cross hairs of Canadian peer

The the engineering services contractor is now subject to a £2.1bn offer from a Canadian industry rival
April 3, 2017

The share price of WS Atkins (ATK) was up 27 per cent after Canadian peer SNC-Lavalin (TSE:SNC) offered to buy the engineering services contractor in a deal that valued its entire share capital at £2.1bn. Atkins revealed that SNC plans to offer 2,080p a share in cash, 35 per cent above the previous trading day’s closing price.

IC TIP: Hold at 1950p

Surrey-based Atkins said the indicative offer, which needs to be firmed up by 1 May under takeover rules, was “at a level that the board would be prepared to recommend” subject to agreement on terms and conditions, which are now being thrashed out in relation to diligence and financing, amongst other things.

The deal is to be funded by equity and debt provided by Canadian pension fund investor Caisse de dépôt et placement du Québec, and secured against SNC-Lavalin's interest in a domestic toll road.

WS Atkins also revealed this week that it had reached agreement with its trustees over its triennial funding plan, which showed a deficit in assets against liabilities of £318m at the end of March 2016. This will require the group to pay £34.5m in the 2018 financial year, with payments growing 2.5 per cent a year until March 2025.