I am expecting a surge in M&A activity over the next six months. High oil prices are really going to help Alberta's economy. - dan
URS to Buy Flint Energy for $1.26 Billion for U.S. Oil
Feb. 20 (Bloomberg) -- URS Corp., the San Francisco-based engineering and construction company, agreed to buy Flint Energy Services Ltd. of Calgary for C$1.25 billion ($1.26 billion) in cash to add projects building pipelines and plants for oil and gas producers in Western Canada.
Flint shareholders will get C$25 per share, URS said today in a statement, about 67 percent more than Flint’s C$14.90 closing price in Toronto trading on Feb. 17. URS also plans to assume C$225 million of Flint debt.
“Expanding our presence in the oil and gas sector has been a longstanding strategic priority for URS,” URS Chief Executive Officer Martin Koffel said today in the statement.
The deal will add 20 cents to 30 cents a share to URS’s 2012 earnings and boost the company’s sales from the oil and gas industry to about 22 percent of total revenue, according to the statement. The deal is expected to close in the second quarter, the companies said.
Flint and its 10,000 employees serve companies in the oil and gas producing areas of Western Canada and the Southwest, Appalachian and Rocky Mountain regions of the U.S., according to the statement. Flint’s operations in Canada accounted for about 80 percent of its sales in the 12 months ended in September.
Flint Chief Executive Officer Bill Lingard will continue to manage Flint’s operations as a new division of URS, according to the statement.
Financing Arranged
URS, which has financing in place to complete the deal, plans to use an existing credit facility and new debt for permanent financing, according to the statement.
“Flint offers a diversified, full cycle of services, has limited exposure to fixed price contracts and derives its earnings entirely from operations in the stable North American region,” said H. Thomas Hicks, URS chief financial officer.
The acquisition will generate cost savings of $10 million to $15 million this year, assuming the deal closes in the second quarter, and additional future cost reductions, Hicks said.
Morgan Stanley and law firms Osler, Hoskin & Harcourt LLP, Latham & Watkins LLP, and Cooley LLP are advising URS on the transaction. Flint is using Credit Suisse Group AG, Bennett Jones LLP and Hall, Estill, Hardwick, Gable, Golden, & Nelson P.C.
Stock markets in the U.S. and Canada are closed today.