UAE-based Kentech Corporate Holdings has agreed to buy the oil and natural gas business of Canada-based SNC-Lavalin Group’s Resource division, as it seeks to expand into markets such as Saudi Arabia and the US.
The deal is expected to be completed in the second quarter of this year and will create a business with a project backlog of $1.1bn.
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Terms of the deal were not disclosed. It will be financed by Kentech with equity and debt.
Montreal-based construction and engineering company SNC-Lavalin Group intends to focus on engineering services business after selling its underperforming oil and natural gas business.
SNC-Lavalin CEO Ian Edwards told analysts: “Our priority is absolutely in the growth of the engineering services business, so to get this fully transitioned to being a leading professional services and project management company.”
In July 2019, SNC-Lavalin announced a restructuring plan that included exiting the fixed-price contracts in the oil and natural gas segment.
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By GlobalDataFor the deal, HSBC Holdings will offer financing backed by receivables, while private equity firm Blue Water Energy, which is Kentech’s main shareholder, will put in its own equity.
Kentech CEO John Gilley said that the merged entity may be listed through an initial public offering in the next five years.
Gilley said: “The deal gives us that engineering capability, but also the capability to get into the fast-growing energy transition space. Our clients are the four or five international oil companies and the national oil companies and we’re going to follow them as they move into their energy-transition strategy.”
The deal is expected to close in Q2 2021.
SNC-Lavalin expects write-down to be in the range of $260m to $295m in Q4 2020.
