CDPQ invests $1.9B to back SNC-Lavalin’s $3.6B WS Atkins acquisition

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By Ted Liu

SNC-Lavalin Group Inc. (TSX: SNC) has reached an agreement to acquire the entire issued and to be issued share capital of WS Atkins plc (LSE: ATK) for £20.80 per share in cash, representing an aggregate cash consideration of approximately £2.1 billion or CND $3.6 billion.

Headquartered in the UK, Atkins is 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. Tracing its roots back to 1938, Atkins today has 18,000 employees with revenues of approximately £2.0 billion in 2016, and is geographically diversified in the US, Middle East and Asia, together with a leading position in the UK and Scandinavia.

The acquisition will be funded through a combination of equity and debt issuance, and supported by Caisse de dépôt et placement du Québec (CDPQ), SNC-Lavalin’s largest shareholder.

As of March 13, 2017, CDPQ beneficially owned, or controlled or directed, directly or indirectly, 18,504,200 common shares, representing 12.3% of the outstanding common shares.  Following the closing of the acquisition, CDPQ will increase its stake in SNC-Lavalin in addition to a stake in 407 International Inc.

The acquisition financing package consists of

  • $1.5 billion loan from CDPQ to SNC-Lavalin Highway Holdings Inc., the entity that holds SNC-Lavalin’s 16.77% interest in Highway 407ETR through 407 International Inc.;
  • $800 million public subscription receipts co-led by RBC Capital Markets, TD Securities and BMO Capital Markets on a bought deal basis backstopped by an $800 million unsecured bridge credit facility with a syndicate of North American banks;
  • $400 million privately placed subscription receipts with CDPQ backstopped by a $400 million unsecured bridge credit facility with CDPQ;
  • approximately £350 million to be drawn under its existing $4.25 billion syndicated credit facility backstopped by a £400 million unsecured bridge credit facility with a syndicate of North American banks;
  • a new £300 million unsecured term loan with a syndicate of North American banks.

This $1.5 billion loan is secured by the full value of SNC-Lavalin Highway Holdings’ shares and the cash flows generated from such shares. The loan has been structured to be of a non-recourse nature as against SNC-Lavalin. Upon closing of the acquisition, CDPQ will be entitled to a non-refundable capital commitment payment of $16 million (4% of the $400 million aggregate purchase price for subscription receipts).

RBC Capital Markets is acting as financial adviser and corporate broker to SNC-Lavalin. SNC-Lavalin’s legal adviser is Norton Rose Fulbright. Davies Ward Phillips & Vineberg LLP acts as legal counsel to CDPQ.

Moelis & Company acts as financial adviser to Atkins.