Atkins boss Uwe Krueger to depart under the deal

Atkins’ management has recommended SNC Lavalin’s 2,080p a share offer for the company, valuing the project management group at around £2.1bn.

The deal, which both firms anticipate will complete by the end of the third quarter 2017, will see the departure of Atkins’ chief executive Uwe Krueger (pictured), who will be replaced by Heath Drewett, Atkins’ current finance chief.

Drewett will report to SNC Lavalin’s board, running Atkins as a separate group within the Canadian firm.

The 2,080p price represented a 35% premium to Atkins’ share price on 31 March, the day before SNC Lavalin tabled its offer, and 9.8 times its Ebitda.

The tie-up will create a 53,050-strong global firm with revenue close to £7bn. Cost benefits from the deal are expected to be in the region of £69.5m (C$120m), the firms said.

In a statement Atkins’ chairman Allan Cook said the offer from SNC-Lavalin represented “the high quality of the business, its people and its future prospects”.

He added: “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.”

Neil Bruce, SNC Lavalin’s president and chief executive, said the acquisition was “fully aligned with our growth strategy, creating a global fully integrated professional services and project management company”.

SNC Lavalin, which has agreed in the event of the deal being scrapped to pay Atkins £50m, said it believed the acquisition would be earnings enhancing immediately.

In a trading update published earlier this month Atkins said it was on track for good results for the financial year to March 2017.

The consultant, which generates around half of its £1.9bn revenue outside the UK, said it was continuing to benefit from the weaker pound, which was inflating profits converted from overseas.

Atkins said its major markets in the UK and North America has shown “good progress” over the full year, while market conditions in the Middle East and Asia Pacific were “broadly unchanged”. In energy, the firm said it was “encouraged by the early signs of stabilisation in the oil and gas market”.