Kentz engineering and construction group holding company Kentz Corporation Limited is set to acquire the US-based integrated oil and gas surface facility solutions provider Valerus Field Solutions business for $435m, in a bid to expand its engineering capability and presence in Latin America.
Kentz claims that the acquisition will be consistent with its strategy of establishing itself as a leader in providing process engineering, EPCM and EPC services for small and medium sized oil and gas processing facilities worldwide.
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The acquisition is expected to deliver increased exposure to high margin contracts further up the value chain.
According to Kentz, the deal delivers diversified and expanded operational footprint to the company as Valerus FS is positioned well in the US onshore oil and gas market, including shale gas.
The company will also get increased exposure to Latin American markets as Valerus FS’ has established presence in Brazil, Mexico, Colombia and Venezuela.
Kentz CEO Christian Brown said: "We have achieved exceptional organic growth since listing in 2008. We have also highlighted our desire to expand our offering through selective acquisition that creates shareholder value."
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By GlobalDataWith the acquisition, which is conditional on the approval of Kentz’s shareholders, the company is also expected to have an increased ability to improve existing EPC capabilities and differentiators in onshore oil and gas processing facilities.
The company will be able to offer integrated solutions for clients and bid on contracts and have an increased focus on mid-sized modular projects expected in gas plants and EPF.
Valerus FS reported earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $51.5m on revenue of $492.9m in the year ended 31 December 2012.
Expected to be earnings enhancing for Kentz in the first full financial year of ownership, the acquisition will also generate a return on investment exceeding the group’s pre-tax cost of capital.
