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CDPQ backs SNC-Lavalin’s $2.7bn WS Atkins purchase

The Canadian pension manager has committed C$1.9bn in debt and equity to an acquisition that forms a global construction company generating C$12.1bn in revenue.

Backed by CDPQ, Canadian construction company SNC-Lavalin has agreed to purchase British-based engineering firm WS Atkins for C$3.6 billion ($2.67 billion; €2.49 billion).

The buyout creates a global project development company generating C$12.1 billion in annual revenue and employing 53,000 people, according to a statement. SNC-Lavalin, based in Montreal, agreed to pay £20.80 ($26.60; €24.86) per share for all of Atkins’ shares, a price the UK-based firm disclosed earlier this month.

CDPQ, SNC-Lavalin’s largest shareholder, supported the deal with C$1.9 billion in debt and equity. The pension manager is providing a C$1.5 billion loan, secured by the value and cash flow of SNC-Lavalin’s interest in the Highway 407 ETR project near Toronto. It also committed C$400 million of equity.

SNC-Lavalin said it will fund the deal with a C$800 million public bought deal offering as well.

The deal is expected to result in C$120 million in cost savings, the company said.

“It positions SNC-Lavalin well for our long-term growth strategy to making a global, fully integrated professional services and project management company,” said Neil Bruce, SNC-Lavalin’s chief executive, on a conference call.

“While offering continued financial flexibility to SNC-Lavalin, the structure of la Caisse’s financing helps protect its capital and allows it to benefit from the future performance of the company,” CDPQ chief executive Michal Sabia also noted. “The acquisition will strengthen the company’s position in high-growth market segments and industries.”

The acquisition will better position SNC-Lavalin to operate in the nuclear, rail, transportation and other core infrastructure sectors “globally but principally in North America,” the firm said.