The boards of SNC and Atkins agree the US$2.7 billion acquisition

During the first full financial year of the merger group around $90 million of cost synergies is expected to be saved.

The deal is still subject to regulatory and Atkins shareholder approval, likely to be given in the third quarter of this year.

Atkins, based in London, brings around 18,300 employees to the group and expands SNC-Lavalin's geographic reach because of Atkins' work in the UK and Scandinavia.

With the acquisition, the SNC group’s business is around 47% infrastructure, 32% oil & gas, 16% power, 3% mining & metallurgy and 2% capital. Around 20% of its business is now in Europe, thanks to the Atkins purchase.

“By combining two highly complementary businesses, we will increase our depth and breadth of services to position us as a premier partner to public and private sector clients,” said SNC-Lavalin chief executive Neil Bruce. “It also creates new revenue growth opportunities in key geographies by positioning us to capitalize on increased cross-selling and the opportunity to win and deliver major projects in new regions.”

Analysts have noted that SNC-Lavalin has suffered from the downturn in the oil and gas market and in recent years has restructured, including slimming down their 42,000 workforce to 35,000 just before the Atkins deal was sealed. It has also been selling off non-core businesses including real estate services in Canada.

In full year results for 2016, SNC’s revenue slipped back 11.6% to $6.22 billion. Adjusted EBITDA dropped 9.4% to around $404 million. The oil and gas sector accounted for 44% of SNC’s revenue in 2016.

Meanwhile, Atkins posted revenue of $2.7 billion in its last financial year – a 6% increase over 2015. Operating profit rose 21% year-on-year to $206 million.

Over half of SNC’s revenue is in North America, with Europe representing only 5%. Atkins has around 49% of its revenue generated in the UK and Europe and only 19% in North America.